Generally speaking, any money transferred from a registered pension plan into a locked-in account (locked-in retirement account (LIRA), life income fund (LIF) or locked-in retirement income fund (LRIF)) must remain "locked-in" and can only be used to provide retirement income.
In certain situations, however, it is possible to apply for special access to money in an Ontario LIRA, LIF or LRIF. One of these situations is financial hardship.
Effective January 1, 2014, the rules for financial hardship unlocking have changed.
It is the responsibility of the financial institution which holds and administers their clients' locked-in accounts, to review each financial hardship unlocking application to determine if it meets the requirements set out in the Regulation for the particular category of financial hardship on which the application is based and, if it does, to approve the application and make the payment from the account in accordance with the Regulation. The financial institution will also determine if the application is to be refused because it does not meet the requirements of the law.
The financial institution is responsible for answering questions and providing information to owners of locked-in accounts, relating to their applications.
It will no longer be the responsibility of the Financial Services Commission of Ontario to review or process applications for financial hardship unlocking.
Under the new rules, there are four categories of financial hardship:
- low expected income;
- payment of first and last months’ rent;
- arrears of rent or debt secured on a principal residence (such as a mortgage); and
- medical expenses.
Each application for financial hardship unlocking must be made based on one of these categories.
All applications must be made on Forms issued by FSCO that are available along with accompanying Guides. An individual can make applications under different categories but must use the form that applies.
The following resources provide additional information on access to locked-in accounts: