Principal Issues: How can a person gain access to money in a locked in retirement fund?
Position: This is a matter which is within the jurisdiction of the provincial pension regulator.
Reasons: The Income Tax Act does not impose the notion of "locking in". Rather, it is a measure governed by provincial pension benefits legislation.
October 2, 2007
XXXXXXXXXX
Dear XXXXXXXXXX:
I am writing in response to letters received on August 13, 2007, written on your behalf by your Member of Parliament, XXXXXXXXXX, addressed to my predecessor, the Honourable Carol Skelton, concerning employee health and dental benefit plans and access to funds held in various locked-in registered retirement accounts.
I understand that you recently discussed your specific questions about employee health and dental benefit plans with Mr. Allen Lloyd of the Barrie Tax Services Office. I trust these discussions resolved your concerns.
With respect to accessing funds held in locked-in retirement accounts, the terms "locked-in RRIF," "locked-in retirement account", and "locked-in retirement fund" have no defined meaning under the Income Tax Act. For example, a locked-in registered retirement income fund (RRIF) is an ordinary RRIF for purposes of federal income tax legislation. However, it is my understanding that when a RRIF is "locked in" under provincial pension standards legislation, it is subject to a locking-in agreement attached to the RRIF contract, which requires that the RRIF be held to provide a periodic pension income to the annuitant after he or she reaches a certain age. This requirement is not imposed by the Income Tax Act, but by the relevant provincial or federal pension standards legislation. In the cases to which you have referred, the applicable regulator is the Financial Services Commission of Ontario, an arm's length agency of the Ontario Ministry of Finance.
While I cannot comment on issues that fall under the mandate of the Financial Services Commission of Ontario, I can advise that information about its rules for accessing locked-in retirement funds can be found at www.fsco.gov.on.ca/english/pensions/unlocking.
I appreciate the opportunity to address your concerns and trust that the information provided will be helpful.
Sincerely,
The Honourable Gordon O'Connor, P.C., M.P.
c.c.: Hon. Bev Oda, P.C., M.P.
Minister of International Cooperation
Unit 2
68 King Street East
Bowmanville ON L1C 3X2
Renée Shields
(613) 957-2049
2007-024893
August 17, 2007