by Grant Fleury…
as printed in the Northern Life newspaper Wednesday January 24, 2007
I am writing this letter to inform the holders of LIRA, LIF or LRIF types of retirement accounts of the inadequate maximum limits you will face when you qualify to withdraw from these plans and of the injustice that you received from your provincial government regarding legislation it passed for it’s MPP’s contained in Bill 27 in 1999.
This Bill contained an exclusive provision which allowed all MPP’s to fully transfer their former pension plan assets into their RRSP’s, essentially bypassing the very rules and legislation they continue to impose on the rest of us.
LIRA stands for Locked In Retirement Account. LIF’s and LRIF’s are subsequently created from LIRA’s when one reaches the qualified age (usually 55) and chooses to begin to withdraw from the money contained in the account.
There are hundreds of thousands of Ontarians who are in possession of these locked-in retirement accounts. The number of these personal locked-in retirement accounts are growing steadily as more companies are getting out of providing defined benefit pension plans.
A large majority of LIRA accounts were primarily created as a result of former collapsed pension plans, pension plan wind-ups or employees leaving a company’s pension plan where monies earned by each plan member were then transferred into a Locked-In Retirement Account as legislated by the provincial government.Once you reach retirement age (or 55) and you want to withdraw some of this money, the LIRA account must then be converted to either a LIF or LRIF. These names stand for Life Income Fund (Locked-In Fund) or Locked-in Retirement Income Fund. There are marked differences between the two but they are both locked-in and full access is restricted.
The existing legislation, supported by the current Liberal government of Ontario, regulates and prescribes the maximum amount of money it's plan-holders can withdraw annually from these LIF or LRIF plans. The current formulas used to arrive at these upper limits are grossly insufficient to meet the needs for a decent standard of retirement living. The prescribed table for LIF’s and formulas used for LRIF’s can be found at the Financial Services Commission of Ontario website located at (www.fsco.gov.on.ca).Most, if not all of the people I talk to about this exclusion have no knowledge of this special exemption from the legislation that was created for these MPP's. They also aren't aware of the prohibitively low limits to access of their own money that they will face when they qualify to retire and begin to withdraw from their nest egg.I have written to every level of government in this province regarding this incredible injustice. All have essentially brushed me off. It’s no wonder, since they’ve already taken care of themselves, why bother with the rest of us. The current ruling Liberal party, who’s leader, back then, openly criticized the “double standard” in the Ontario Legislature, has remained silent and done nothing to correct and create a “single standard for all Ontarians”.
When their pension plans were eliminated and wound-up in 1999, a special provision in this Bill was created to allow themselves to fully transfer 100 percent of their contributions from their terminated gold plated pension plan over to their personal RRSP’s.
And as we all know, RRSP’s have no locks or maximum withdrawal limits for future withdrawals. This was done ONLY for themselves and as quietly as possible so as not to attract media attention or public scrutiny.
The current legislation is even at odds with Stats Can's life expectancy of 77.2 years for a male as it uses 90 years in all their formulas to calculate the maximum withdrawal limits! Also, according to Stats Can, there is less than one-half of 1 percent of people alive at 90. Most of us will never live to 90 and thus never see the greater percentage of the remaining money in our locked-in plans!
This current legislation must change!
On December 13th, 2006, a Private Members Bill 175 was introduced at the Ontario Legislature by Andrea Horwath, MPP for Hamilton East, who has decided that the government has it wrong.
This Bill is an act to amend the Pension Benefits Act to allow the transfer of 100% of locked-in pension funds to a RRIF(Registered Retirement Income Fund) thus eliminating the maximum limits to access of your retirement accounts currently imposed by the existing legislation.
This action was primarily initiated by Bill Costello (private citizen) and driven and fully supported by various people including myself, Bill Nafziger (private citizen), CARP (Canadian Association for the 50 Plus) with a membership of 400,000 and many others in Ontario interested in changing this outdated legislation.
We are all demanding that all Ontarians have the same equal opportunity to fully unlock our LIRA’s, LIF’s and LRIF’s as the MPP’s did for themselves in 1999.
On January 16th, CARP presented a LIF brief to the special assistant for Greg Sorbara (Minister of Finance) requesting full unlock provisions for all Ontarians. This can be found on their website at www.carp.ca. Search for “LIFS” - identified as items 22 to 24.
As equally stated by CARP, holders of LIRA’s, LIF’s and LRIF’s are urged to communicate with your MPP, Mr. Sorbara, Mr. McGuinty and the leaders of the Opposition parties to express your support for the passage of Bill 175 insisting that the locks be removed from your locked-in retirement money.
Additionally, you can sign the on-line petition to unlock locked-in pension funds at
Bill 175, an act to amend the Pension Benefits Act, is one of the most important Bills to come along for the seniors of Ontario in some time. It will dramatically affect the quality and level of retirement for every Ontarian, as it will return full financial control of your locked-in retirement savings over to you by removing the locks and allowing a full transfer into a RRIF (which is not locked and has no maximum limits for withdrawal). All without costing the taxpayer a single dollar!
Grant Fleury is a Sudbury man.
He can be reached at locked_pensions_gf@yahoo
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