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Gordon Pape's Submission in Response to Finance Canada's Regulatory Framework for Federally Regulated Defined Benefit Pension Plans consultation:

Locked-in Pension Money

I recently received a question from someone who is in danger of losing the family home because of Ottawa's bureaucracy, stifling restrictions, and apparent indifference to human suffering. Here's what he wrote:

"I am a former airline employee. I left in August, 2003 and, because of company restructuring, I have only recently received my pension as a locked-in RRSP. I desperately need a portion of my pension because of hardship. I could lose my house without this money.

"My pension is under federal regulations because I was employed in a transportation industry. The only means to release it is to be terminally ill, unlike Ontario law which provides many exceptions to those who may need their money earlier than they thought.

"Is there any way that I can reach this money? It seems unreal that I could lose my house with my own money, that I put into to my pension, sitting in a bank!!!" – J.M.

I know this is hard to believe, but he's right. Worse, nothing can be done about it! The federal government's paternalistic rules governing pension plans do not allow premature withdrawals for any reason. If you check the FAQ section at the website of the Superintendent of Financial Institutions at http://www.osfi-bsif.gc.ca/osfi/index_e.aspx?DetailID=374 you'll see that this is the very first issue addressed in the Pensions/RRSPs section. That suggests they receive a lot of inquiries about withdrawals from locked-in accounts.

Ottawa's "hands-off" policy is an anachronism, a throw-back to the days when governments believed it was their responsibility to save us from squandering our retirement savings on frivolities. Most provinces have moved into a new age of enlightenment in this regard. Ontario now allows people under its pension jurisdiction to dip into locked-in money for a wide variety of reasons, ranging from low income to shortened life expectancy and including the threat of losing your home. Complete details can be found at: http://www.fsco.gov.on.ca/FSCO_UW_MainEngine.nsf/DocUniqueID/
9D2B4CCA9AF6E9A5852569CC0075482D?OpenDocument

Alberta is equally flexible on this issue, and most other provinces are moving in the same direction. But Ottawa has its feet set in concrete on access to locked-in plans.

In late May, the Department of Finance issued a comprehensive Consultation Paper on potential changes to the Pension Benefits Standards Act (1985), which governs plans under federal jurisdiction. I dealt with some of the subjects it addresses last week. But one that is not on their list is the question of locked-in accounts. Clearly, it is nowhere near the top of Finance's agenda.

When I asked about it, I was told by a spokesperson that the Consultation Paper is not meant to exclude any pension-related topic. Anyone can make a submission about any relevant subject, including access to locked-in plans.

All well and good, but that means the bureaucrats are leaving it up to individual Canadians to fight this battle and many of the people who are directly affected are among the less-privileged in our society – the poor, the sick, the financially distressed. They probably aren't even aware of this back-door invitation and they have no lobby group to go to bat for them. If Finance isn't going to show some initiative here, then no one will and this patently unfair situation will be perpetuated.

If you want to make your views known on this matter, or any other aspect of federal pension legislation, you can submit them by e-mail before Sept. 15 to pensions@fin.gc.ca

To read the full discussion paper, go to http://www.fin.gc.ca/activty/consult/PPBnfts_e.html

For my part, I'm submitting this article. Maybe it will wake up someone, maybe it won't. But I can guarantee that if there are dozens of submissions along this line, someone is going to start paying attention. I don't want to get any more e-mails like the one from J.M. There is absolutely no justification for this to continue. – G.P.