Changes to the Manitoba Pension Regulation that came into effect May 31st, 2010 made minor alterations to the requirements for the small amount release and some major ones to the shortened life release.
Small Locked-In Retirement Account and/or Life Income Fund
The release of a small LIRA or LIF can still be done at any age and continues to be based on 40% of the Yearly Maximum Pensionable Earnings at age 65 – 2010 $47,200 x 40% = $18,880. When the annuitant is under age 65, the Manitoba Pension Commission has provided a factor table that is used to adjust the $18,880 based on the annuitant’s age. http://www.gov.mb.ca/labour/pension/tables/interestfactors.pdf Our Tools for Credit Union web-page also provides an excel worksheet to confirm your calculation.
The annuitant must still include all Manitoba (MB) locked-in pension funds under any LIRA, LIF and LRIF in order to determine if a release is possible.
e.g. Age 48 LIRA annuitant with only $6,789 under MB jurisdiction. Factor 2.6928 - $18,880 ÷ 2.6928 = $7,011.29 ; funds may be released.
The first change is the need to provide the annuitant with a statement of the LIRA and/or LIF balance on the date of the release request. When the annuitant has multiple plans at different institutions, s/he must provide a copy of the statement to each institution that would also have the annuitant complete their Bond of Indemnity form.
The second change actually removes one form; the spouse/common-law partner no longer has to provide his/her authorization for the funds to release. So no spousal waiver/consent form is required when releasing funds due to a small amount is being requested by an original pension plan member.
The Manitoba Pension Commission has confirmed that once all the requirements of the regulations have been met, the small amount can be released as cash or transferred to an RRSP or RRIF.
Shortened Life Expectancy
The ability for the release due to shortened life has now been restricted to an annuitant who is terminally ill or has a disability with a prognosis that s/he has less than 2 years to live. A letter or form completed by a Canadian medical practitioner must be provided. Look for a form from your Trustee that the doctor can complete.
This is a major change as previously there was no timeframe and the doctor just had to certify that the individual has considerable shortened life expectancy. Ontario’s pension legislation has a similar 2 year life expectancy and I have not heard about of any complaints. Should you have a member who is looking for a release but does not fall under this new definition, advise them to contact the Manitoba Pension Commission to express they objection to this change.
The spousal waiver form, which is required when the annuitant is the original pension plan member, has been changed. Form 7 – Consent to Withdrawal from LIRA, LIF or LRIF Due to Terminal Illness or Disability must now be completed. When the request for the release is being done from a LIRA, Form 5 – Waiver of 60% Joint Pension Entitlement for Pension Plan or Locked-In Retirement Account must also be completed.
Both the annuitant and spouse/common-law partner (if applicable) must receive a statement advising the plan’s balance as of the date of the request. Your credit union may wish to develop a form letter that staff can print off and complete the account balance to provide to the spouse/common-law partner and annuitant at the time the forms are signed.
The Manitoba Pension Commission has confirmed that once all the requirements of the regulations have been met, the LIRA and/or LIF can be released as cash or transferred to an RRSP or RRIF.
Want to learn more and can attend a Winnipeg session? Consider RP Success’ fall MB LIRA, LIF, PRRIF and PBSA 1985 LIRSP, LIF and RLIF training session which will specifically cover special releases and maximum payment calculations in those two jurisdictions. In spring 2011 our Locked-in Registered Plans session will also provide information on all changes.