Newfoundland and Labrador residents can now unlock benefits held in locked-in retirement savings arrangements for reasons of financial hardship or non-residency in Canada.
The changes are in effect as of March 1 and only affect locked-in retirement savings arrangements such as locked-in retirement accounts, life income funds and locked-in retirement income funds, according to a press release from Morneau Shepell Ltd. The changes take place following a consultation by the provincial government last fall.
A person can qualify for financial hardship unlocking if their expected total income for the year is not more than 66.66 per cent of the year’s maximum pensionable earnings for the year, which the release noted is $41,063 for 2021. For unlocking benefits on this basis, the amount that may be unlocked is determined by subtracting 75 per cent of the person’s expected income from 50 per cent of the maximum pensionable earnings for the year of the withdrawal.
A person can also qualify for financial hardship if they’re unable to pay for medical or disability-related expenses incurred or to be incurred by the account owner, a spouse or dependent. They can also have access if they default on a mortgage, or are in arrears in rent payments, secured against the account owner’s or spouse’s principal residence or require first month’s rent and a security deposit for the account owner or spouse.
The owner of a locked-in retirement savings arrangement may also withdraw the full amount if the person has resided outside Canada for at least two consecutive calendar years and provides the prescribed documentation, including a spousal waiver if applicable.