Article last updated on February 7, 2022
Generally speaking, in Canada, to unlock pension funds, the funds must first be transferred out of the employer's registered pension plan (RPP) and into a LIRA (locked-in retirement account) or LIF (life income fund) in your name. However, to transfer pension funds held in an RPP, you must no longer be employed by an employer member of the Plan.
It is also important to note that not all jurisdictions in Canada allow unlocking of registered funds for financial hardship reasons. New Brunswick does not have legislative provisions for financial hardship unlocking.
What does the above mean for CSS members? It means that if you are currently employed with an employer member of the Plan your pension funds are locked-in to provide you with financial security in retirement and cannot be unlocked. However, if you are an inactive member of the CSS Pension Plan, meaning you are no longer employed by an employer member of CSS and no longer contributing to the Plan, you may be able to unlock your CSS holdings for financial hardship reasons if your funds are governed by legislation in a jurisdiction that allows financial hardship unlocking.
There can be events in one's life that can cause severe financial strain. When this happens, some members of defined contribution pension plans (such as CSS) consider whether they are eligible to withdraw their pension funds for financial hardship reasons. As pointed out in #1 above, there are some circumstances where you may be able to unlock pension funds for financial hardship reasons. If you can, should you?
Before taking the drastic step of unlocking and spending the funds you'll need to help provide a financially secure retirement, you should ensure you've exhausted all other avenues. Other avenues may include but are not limited to, other financial resources, government programs, debt repayment programs, and changes to spending or income patterns. It is important that you speak with a qualified financial professional to help you determine the best course of action for you.
Specific to COVID-19: The Government of Canada is taking action to support Canadians and businesses facing hardship as a result of the COVID-19 outbreak. You may find more information on this webpage.
It is also important to keep in mind that your locked-in funds in a registered plan may be protected from creditors while they are held in the registered plan (like holding them in the CSS Plan). Unlocking those funds may expose them to creditors if you are having difficulty making debt payments.
If you are eligible for financial hardship unlocking (see #1 above) and have determined that you should unlock rather than utilizing another option (see #2 above), the following resources provide information on how to unlock registered locked-in funds in various jurisdictions.
Remember, in all cases, the funds must be with a credit union or financial institution to be eligible for financial hardship unlocking:
Alberta (financial hardship unlocking is referenced on page 6)
Saskatchewan (financial hardship unlocking comes into effect March 22, 2022)
There are no legislative provisions for financial hardship unlocking in the following jurisdiction:
Unlocking registered funds is a decision with significant potential long-term negative effects and shouldn't be undertaken lightly; there may be other short-term alternatives available. Please contact a CSS Retirement and Pension Advisor if you wish to discuss the above in more detail.