Amendments were made to the Newfoundland Pension Benefits Act on December 14, 2020 allowing requests for increased access to locked-in retirement savings. The adjustment was significant for individuals experiencing financial hardship (defined by specific criteria) but also contained provisions for non-residents of Canada.
Pension funds are locked-in to ensure they will be available to provide a source of income for the retiree and their spouse. Unlocking provisions exist in most provinces based on specific circumstances and generally cover financial hardship, small balances, shortened life expectancy, and permanent departure from Canada.
In this post, we’ll focus specifically on the various provincial rules for unlocking when the owner has departed Canada. Consult the various provincial pension regulations and/or your pension plan administrator for additional information or details regarding unlocking under other circumstances.
In all jurisdictions, written evidence that the Canada Revenue Agency (CRA) has determined the owner to be a non-resident for tax purposes for greater than two years is required. To obtain a letter of determination from the CRA, the owner should complete CRA Form NR73 (Determination of Residency Status (leaving Canada)) outlining their residential ties to Canada and abroad. Additional provincial requirements to submit to your plan custodian are outlined in the table below.
Before unlocking your retirement funds, you should consider the following:
- Unless eligible for rollover to a RRSP or RRIF account, the amount withdrawn is considered income, subject to income tax, and may affect your eligibility for government benefits or assistance programs.
- Funds withdrawn from a locked-in account will no longer be considered protected from creditors.
- Your tax professional and your financial planner should be consulted for how this provision may align within your overall financial plan.
- If you are a non-resident of Canada and exploring whether to unlock your Canadian retirement account, we always recommend you speak to a qualified cross-border financial planner before acting. A cross-border financial advisor will look at your overall financial framework, goals, and objectives before determining the recommended course of action for your locked-in plan.
| Province | Additional Requirement | Eligible for Rollover to RRSP/RRIF |
| British Columbia | Signed statement from the owner indicating the owner has been absent from Canada for two or more years | Yes |
| If applicable, signed Spousal Waiver of entitlements (Form 1) | ||
| Alberta | If applicable, signed Spousal Waiver (Form 6 (pensions) or Form 13 (Locked-In Account)) | Yes |
| Saskatchewan | Certificate of Non-Residency (Form 4) | Yes |
| If applicable, signed Spousal Waiver (Form 5) | ||
| Manitoba | If applicable, signed Spousal Waiver (Form 3) | Yes |
| Ontario1 | Complete and sign Form 5 | No |
| For pensions, if applicable, signed Spousal Waiver (Form 4.2) | ||
| New Brunswick | If owner or spouse are Canadian citizens, non-resident unlocking is not available | Yes |
| If applicable, signed Spousal Waiver (Form 3.5) | ||
| Nova Scotia | Complete and sign Form 11 and submit to plan custodian within 60 days | |
| Prince Edward Island | No provision | No |
| Newfoundland and Labrador |
Allowable as of March 1, 2021 Spousal Waiver required Forms still in production |
No |
| Quebec | Custodian may require a letter of direction and/or spousal consent | Yes |
| Federal1,2 | Custodian may require letter of direction and/or spousal consent | Yes |
1Pension Plans: Non-Resident Former Members A pension plan is not required to provide this option to its former members. Unlocking is only an option for non-resident former members. Active plan members or retired members are not eligible solely on the basis of non-resident status.
2The Office of the Superintendent of Financial Institutions (OSFI) is also the regulator for pension plans established in respect of employment in the Yukon, Northwest Territories and Nunavut.
