It has come to OSFI’s attention that some organizations are offering former pension plan members, whose benefits are covered by the Pension Benefits Standards Act, 1985, the opportunity to access a portion of their locked-in RRSP funds in return for a loan application. These organizations advertise that they have found a loophole in the tax rules that allow for tax-free withdrawals of locked-in RRSP funds by former members. OSFI is concerned that these practices attempt to circumvent the requirements of the Act to the detriment of the pension plan members.
The intent of the Act is to ensure the financial security of members’ pension benefits upon retirement. Any arrangement that contravenes the Act may threaten the financial security of the benefits for the members and their beneficiaries.
For further information regarding these practices, you may wish to refer to the Web sites of the organizations and government agencies listed below.
For further information regarding locked-in RRSP funds, you may wish to refer to the Pensions/RRSP section of OSFI's Frequently Asked Questions (FAQ) page