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Unlocking Locked in Pension's ( LIF, LIRF, LIRA )

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Hi; To anybody that is interested in unlocking locked in pensions . The Ontario Minister of Finance is asking for input from the public for the 2007 Budget .

This is a good time to send in submissions requesting that the Government unlock LIF's , LIRF's & LIRA's

These funds are our own money they are not government run programs Yet the Ontario government is still trying to keep the control of these funds from their rightful owners.

http://www.fin.gov.on.ca/english/consultat...7/calendar.html

The Ontario government unlocked these funds for themselves .

Just as they gave themselves a 31% raise . Yet they have no interest in unlocking the money for the rest of Ontario people.

Saskatchewan . Manitoba Alberta & New Brunswick have unlocked the funds for their people.

It just may be that the Ontario government uses the money from these funds to pay for their raise as when Seniors pass away and then the money is passed to the person's estate it becomes unlocked immediately and then is taxed by the Ontario government at the highest rate.

The only other way these funds become unlocked is if one spouse passes away then they become unlocked for the other spouse.

Or you reach the age of 90. How many of us will reach that age as the average lifespan of a man is around 77 & a women a few years past that.

I was talking to a senior yesterday and she said " Why are You working so hard to unlock these funds .You will be 65 next year and then they will be unlocked"

THIS IS NOT SO. These funds will not come unlocked automatically.

I would advise everybody that has a locked in pension plan to have a serious look at it or else you will be in for a sad surprise when you retire.

Now is the time to lobby the government as more and more people and organizations are getting behind the movement to unlock these funds and every letter that is mailed into your MPP, Premier & Finance Minister helps.

Regards Bill Costello

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I'm confused. Aren't LIFs and LIRAs covered by Federal legislation? What power does the Ontario Finance minister have to change that?

The Provinces also have Locked in Funds. The Federal Government is also being lobbied to unlock these funds.

Regards Bill C.

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To the people that are interested Andrea Horwath NDP presented the private members bill to unlock locked in pensions.

This is the statement she gave in the legislature.

Excerpt from hansard

Official Record of the Ontario Legislature

MEMBER’S STATEMENT

Wednesday, December 20, 2006

It’s time the McGuinty government allowed Ontario’s 1.7 million seniors to unlock their locked-in pensions. Bill 175, my private members bill, would allow seniors to withdraw up to 100 per cent of their locked-in pension funds. This one measure would instantly add to our seniors’ financial independence and quality of life at no cost to the taxpayer.

CARP, Canada’s Association for the Fifty-Plus, supports my bill “100 per cent”.

Bill 175 would unlock the vault of pension savings that McGuinty Liberal MPPs are withholding from locked-in pensioners while they themselves care for themselves and their own life savings plans.

I’m sure many people would be surprised to learn that once pensions are locked-in, it is virtually impossible for Ontario seniors to access their money. Only at age 90 can seniors withdraw their funds completely. Until then, they are limited to scant withdrawals of 2.5 to 6.2 per cent of the principal.

Alberta, Saskatchewan, Manitoba and New Brunswick and the federal government have already changed their laws to enable seniors to access some, or all, of their locked-in pensions. But in Ontario, only 61 MPPs have the freedom to unlock their pensions. For everyone else, these pensions are locked tight, cannot be withdrawn except in dire financial circumstances and only with government approval.

Why should our seniors have to put up their hand and ask permission to access their own money, which they saved up over a lifetime of hard work?

Unlike the McGuinty Liberals, I trust seniors to manage their own money. Let’s unlock pensions in Ontario for our seniors. They have worked hard all their lives and deserve to reap the fruits of their contributions. Seniors deserve the right to access and control their locked-in pensions and the McGuinty government should respect that right

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You knew the rules going in. If you wanted more liquidity, you should have kept more money outside of locked-in investments.

It's awfully silly to be changing the rules after the game has really been played.

The reason governments offer locked in investments (generally at reduce tax in some way or another) is so it 'guarntees' the government that they won't have to pick your ass up off the street a few years later when your broke. I strongly support this.

No one ever said you couldn't invest elsewhere.

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You knew the rules going in. If you wanted more liquidity, you should have kept more money outside of locked-in investments.

Off the topic of locked in pensions a bit, "You knew the rules going in", if only the companies that signed up to DB and DC pension plans would acknowledge such facts :angry: That would certainly be the attitudes of Hamiltonions. Hamiltonians have supported and worked harder to keep their pensions, vs the other former manufacturing cities like Brantford.

People in Hamilton is are aware of Massey Ferguson (Varity Corp) leaving everyone high and dry.

So you might have had money outside the locked in investment, only to have some or all of it lost, stolen or bargained away. Even little things like having the indexing of pension removed after you have retired.

It's awfully silly to be changing the rules after the game has really been played.

You are absolutely correct. It does seem silly to change the rules. I have locked in Pensions as well. But Rules are often changed or attempted to be changed with regards to pensions.

The reason governments offer locked in investments (generally at reduce tax in some way or another) is so it 'guarntees' the government that they won't have to pick your ass up off the street a few years later when your broke. I strongly support this.

So do I. The reason and logic behind it is for the "pensioners" protection.

Yet one can take RRSP and invest them in a house.

Many of these other plans came out before the RRSP trend. Also, there are many people whom retire early, only to find the company later goes insolvent, and the pension fund gone/underfunded. A monthly income Heavily reduced, and no access to that other locked in money.

That doesn't mean, I agree with unlocking a pension plan, with the information I currently have.

No one ever said you couldn't invest elsewhere.

Absolutely. While the CPP is on very strong footing, it is not always the case with DB plans if they are underfunded or with DC plans if you are not on top of what the company is doing. You can get wiped out completely. I would recommend you invest elsewhere, if you don't believe you can make it to retirement without needing access to that locked in money.

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Yet one can take RRSP and invest them in a house.

It needs to be reinvested within a certain number of years, I think 5. If it's not reinvested, it's taxed as income and I believe there is a penalty on top of that. I think it's a great program that allows people to save more quickly to buy their home, which is of course, the biggest step to financial security.

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"You knew the rules going in. If you wanted more liquidity, you should have kept more money outside of locked-in investments."

At the time we started a pension plan there was only one type of plan available to us. When things changed in the 80"s our financial advisor called a meeting and told us that unlocked RRSP's were available. At that time I stated that we had better get out of the locked in plan and go into an unlocked RRSP plan.

The financial advisor said we didnt have to . He said that if we retired before our normal retirement date we could transfer the funds into a RRSP. He didn't bother to tell us it was a locked in RRSP.

We found out later when the first person in our plan retired early. The result was he had to go back to work as he could only access a small percentage of his funds. Many of us put in extra money into that plan for a comfortable retirement. When we found out how we had been mislead . We all transferred out of that plan including the employers but it was too late for many of us close to retirement.

Through many forums and corespondents from many people I have found out that a lot of people were mislead about these pension plans.

"It's awfully silly to be changing the rules after the game has really been played."

Ontario MPP's changed the rules for themselves. Saskatchewan changed the rules for their seniors. Alberta Changed the rules , Manitoba changed the rules, New Brunswick changed the rules. Why not Ontario

"The reason governments offer locked in investments (generally at reduce tax in some way or another)

The reasons the government offer locked in investments is so they can tax you at the highest rate when You and Your spouse pass away and the money is passed to Your estate. They do not allow you to take much at a reduced rate. The only ones that benefit from a locked in pension is the government and the financial institutions

'guarntees' the government that they won't have to pick your ass up off the street a few years later when your broke. "

I have more faith in people . If they saved money for a comfortable retirement I am sure they will not squander it.

Why also would the government have to pick a persons ass up. Are We not all in tilted to OAS & CPP if we have paid our taxes and paid into CPP.

Or is it that You think that a person that has saved for their retirement are not in titled to the same benefits as people that do not save for their retirement.

No one ever said you couldn't invest elsewhere.

No no one ever said. But there are thousands that were really unaware how their pension planes worked until they reached retirement age. I am finding this from people every day as I have received endless EMails on this subject.

Many people were misinformed by their financial planers and I have received E-Mails from financial planers that were misinformed by their company.

Regards Bill C.

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Hi; in the next post is a press release that Andrea gave.

In it it states that 26206 applicants from 2003 to 2006 were granted funds under financial hardship.

I would like to clarify this a little bit.

To apply for funds under financial hardship You have to pay a fee of Minimum $200. to a Maximum of $600. 2% of the funds that You are requesting up to the maximum. ( This is Your Money that You are trying to get ) When You go to a bank they dont charge You a fee to take Your own money out. Yet the government does.

You also have to deduct the value of certain assets you have such as a cottage etc.

After all this You are not allowed to have a income of over $29,133.33.

( There is something drastically wrong with this system.)

Say if You needed an extra hundred dollars a month to pay taxes on your cottage so as You could keep it for the rest of Your life and enjoy it But Your income was $29,133.33.

Well that is too bad . The government Say's sell Your Cottage . Even though You have sufficient funds in Your portfolio to cover these expenses and would have sufficient funds for You retirement.

This is Your Money and the Government should not have control of it.

Andrea,s Press release will be following in the next post.

Bill C.

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HORWATH’S BILL WOULD LET SENIORS UNLOCK THEIR PENSIONS

QUEEN’S PARK – Hamilton East MPP Andrea Horwath says she has the key that would allow seniors to unlock their locked-in pensions.

The NDP Pension Critic will introduce a private members bill today that would allow seniors to withdraw up to 100 per cent of their locked-in pension funds.

“Seniors want the right to access and control their own money and the McGuinty government should respect that right,” said Horwath.

Alberta, Saskatchewan, Manitoba and New Brunswick and the federal government have already changed their laws to enable older adults to access some, or all, of their locked in pension, Horwath said. But in Ontario, only a select number of MPPs have the freedom to unlock their pensions. For everyone else, pension funds that are in locked-in accounts cannot be withdrawn except in certain specified circumstances.

From April 2003 to March 2006, there were 29,821 people who applied to the Financial Services Commission of Ontario for permission to unlock their pensions. Of those, 26,296 were approved.

“At a time when so much is being said about offering choice for senior citizens, a law to let them choose whether or not to unlock their pension is long overdue,” Horwath said.

Horwath’s Pension Benefits Amendment Act, 2006, would amend the Pension Benefits Act to allow up to the entire amount in the account to be transferred into a registered retirement income fund.

The MPP says she’s heard from many seniors like Milverton’s Bill Nafziger who strongly object to the rule that says people can’t cash out until age 90 and are limited to withdrawals of 2.5 to 6.2 per cent of the principal they have locked up in annuities, LIRA, LIF or LRIF plans.

Bill Gleberzon, Director of Government Relations of CARP, Canada’s Association for the Fifty-Plus, said his group supports Horwath’s bill “100 per cent”.

"Unlocking locked-In funds will not cost the Province a single penny,” Gleberzon said. “It will end outmoded paternalism and enhance the independence and quality of life for those with LIFs. Allowing access to the principal in locked-in funds is the right and fair thing to do for Ontarians -- especially since a precedent was set in 1999 under Bill 27 when 61 MPPs were permitted to do so," he said.

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If you have a cottage and a home you should have enough equity to borrow the $100 you need to pay the taxes.

Don't people budget anymore?

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If you have a cottage and a home you should have enough equity to borrow the $100 you need to pay the taxes.

Don't people budget anymore?

geoffrey; Tell Me why in H--- should a person have to borrow funds when You have plenty in a pension plan that the government wants to reap for their own benefits.

All that is needed is to convince the government to give the people control of their own money.

geoffrey ??? that was just an example!

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Hi ; A friend asked me to post this on my site.

Also I am still taking signatures on the online petition to Unlock locked in pensions.

I will be sending it in again as we have to keep the pressure on.

Thanks Bill C.

Suppose that you as an average Ontarian contributed $150,000 to an RRSP during your working lifetime.

Your retirement plans include budgeting the $150,000 RRSP plus income tax savings resulting from a lower income during retirement.

Then you experience disbelief at retirement because:

- you are only entitled to $50,000 during your retirement years with no access to the remaining $100,000 which goes to your spouse only after you die

- your spouse can spend the $100,000 with no stipulations only after your death

- the only way to get more than $50,000 in your retirement years is to send the government (FSCO) up to $600 after reading/completing a 15 page application explanation and completing a 20 page application. The government then determines if you are eligible for additional money because of your dire circumstances.

Disbelief turns to anger because:

- you can only get 1/3 of your RRSP funds in your retirement with restricted and/or no access to the remainder

- your spouse gets the 2/3 of your RRSP funds after your death with no restrictions

- you are unable to achieve any income tax savings and then realize that Revenue Canada view the RRSP funds in your spouses estate after her death as income in one year and assesses a high tax rate

- a paternalistic Ontario government controls and budgets your RRSP money in your retirement years, not you

Imagine the public reaction in Ontario if the above scenario occurred.

Few financial planners, pension consultants and others that I have encountered are aware that these consequences applies to all Ontarians who have contributed to a locked in pension plan instead of an RRSP.

The 61 Ontario MPP’s in 1999 who used Bill 27 allowing them and nobody else, to transfer their locked in pensions to an RRSP were certainly aware of the consequences of a locked in pension.

Bill N.

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Hi this is a post from another forum that a Friend put in . He gave permission to use his posts to get the word out as I have more time. For people that are interested in the full discussions they can be found at the 50 plus site under investing I dident find this site until a short while ago.

Take Care Bill Costello

Suffering Senior

In addition to contacting Finance Minister Sorbara, as requested by Oldman, I would suggest you start sending letters to three other MPPs ... who currently sit in the House ... and who also received exclusive financial privilege ... courtesy of Bill 27.

1st ... Bob Runciman, PC MPP - Leeds-Grenville, Official Opposition House Leader ... e-mail address ... [email protected]

Mr. Runciman sent me the following statement ... that he spoke in the Legislature on December 20, 2006.

"Today, I'm calling on the McGuinty Liberal government to allow Ontarians to have full access to their, and I emphasize their, locked-in retirement accounts.

Four other provinces in Canada have opened-up access to the principal in these accounts, ranging from 25% in New Brunswick, to 100% in Saskatchewan and soon to be 100% in Manitoba.

Under current Ontario rules our residents can only access the principal in their accounts if they can prove to a government board, dire financial or health need through a bureaucratic appeal process.

The only exceptions to this rule are current and former Members of this Assembly who had their defined benefit pensions terminated and rolled into locked-in accounts. Those Members - and I'm one of them - can access 100% of the principal. This is wrong, Mr. Speaker, and needs to be corrected.

There should not be two classes of citizens for pension rules and the time is long overdue for government to cease its paternalistic, we know what's best approach to Ontario retirees.

Premier, I urge you to move quickly to allow Ontarians full access to their locked-in pensions."

2nd MPP ... who was part of the group of 61 ... Mr. Norm Sterling, PC MPP - Lanark Carleton, Opposition Critic for Democratic Renewal ... e-mail address ... [email protected]

3rd MPP ... Mr. Jim Bradley, Liberal MPP - St. Catherines, Minister Responsible for Seniors ... e-mail address ... [email protected]

Mr. Bradley is currently Minister Responsible for Seniors ... and he received, under Bill 27, the exclusive privilege of being able to unlock all his pension benefits ... and yet he is part of a Liberal government that refuses, to date, to extend that same privilege to all other seniors in Ontario, also holding locked-in pensions.

Something is terribly wrong about this picture ... keep on sending those e-mails and letters!!!!

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geoffrey; Tell Me why in H--- should a person have to borrow funds when You have plenty in a pension plan that the government wants to reap for their own benefits.

All that is needed is to convince the government to give the people control of their own money.

geoffrey ??? that was just an example!

Actually, it'd likely be better for you to borrow the funds.

You've got shitloads of assets, your going to get prime plus one... that costs you 7%. In a properly invested portfolio your likely to gain 10% in that same time frame these days.

So what up? Take my advice, keep your money locked away and just borrow. It's actually cheaper.

I've got numerous student lines of credit that I rack up and use the money to buy investments. I make 12-14% on them, and pay 5.5% because they are nice and give students a good rate. If I only qualified for government loans I'd be making even more. I make 7-9% without even investing my own money.

People are so poor at realising the obvious costs in taking out their investments.

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1st ... Bob Runciman, PC MPP - Leeds-Grenville, Official Opposition House Leader ... e-mail address ... [email protected]

Mr. Runciman sent me the following statement ... that he spoke in the Legislature on December 20, 2006.

"Today, I'm calling on the McGuinty Liberal government to allow Ontarians to have full access to their, and I emphasize their, locked-in retirement accounts.

Four other provinces in Canada have opened-up access to the principal in these accounts, ranging from 25% in New Brunswick, to 100% in Saskatchewan and soon to be 100% in Manitoba.

Under current Ontario rules our residents can only access the principal in their accounts if they can prove to a government board, dire financial or health need through a bureaucratic appeal process.

The only exceptions to this rule are current and former Members of this Assembly who had their defined benefit pensions terminated and rolled into locked-in accounts. Those Members - and I'm one of them - can access 100% of the principal. This is wrong, Mr. Speaker, and needs to be corrected.

There should not be two classes of citizens for pension rules and the time is long overdue for government to cease its paternalistic, we know what's best approach to Ontario retirees.

Premier, I urge you to move quickly to allow Ontarians full access to their locked-in pensions."

Clearly there is Conservative Support for releasing Pensions as well as the NDP.

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Hi Here are the facts from the other provinces and What the people accomplished there.

Building - Regina, Canada S4S 0B3 - (306) 787-6281

News Release

--------------------------------------------------------------------------------

April 3, 2002

Justice - 208

PENSION RESTRICTIONS REMOVED

New pension regulations giving Saskatchewan retirees more control over their

retirement income are now in effect.

"Retirees have been asking for a greater ability to manage their own

retirement funds," Justice Minister Chris Axworthy said. "This change removes

the limitations on pension payouts, respecting the ability of retirees to

manage their own affairs."

People with locked-in retirement accounts now have the option of converting

their pension funds into prescribed registered retirement income funds (RRIFs)

at retirement, similar to the way registered retirement savings plans (RRSPs)

are converted to RRIFs.

A prescribed RRIF has no maximum withdrawal limit. Retirees have the ability

to determine for themselves their level of income. Money in existing life

income funds and locked-in retirement income funds may be transferred to a

prescribed RRIF. Taxes are payable only on withdrawal.

Retirees should contact their financial institution, financial advisor or

pension plan administrator for more information on transferring money to a

prescribed RRIF.

-30-

For more information, contact:

Jeff Bohach Dave Wild Communications Pension Benefits Branch Saskatchewan

Justice Saskatchewan Justice Phone: (306) 787-5657 Phone: (306) 787-2458

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Manitoba

Labour and Immigration Pension Commission

1004 - 401 York Avenue

Winnipeg MB R3C OP8

Fax. No. (204) 948-2375Tel. No. (204) 945-2740

[email protected]://www.gov.mb.ca/labour/pension/index.html

May 25, 2005

One-time or Prescribed Transfer of up to 50% of the balance in one or more Life Income

Funds (LIFs) or Locked-in Retirement Income Funds (LRIFs) to a Prescribed Registered

Retirement Income Fund.

Reference: The Pension Benefits Act, Section 21.4 and Regulation 76/2005

Section 21.4 of The Pension Benefits Amendment Act was proclaimed into law effective

May 25, 2005, and the Pension Benefits Regulation was amended effective the same date.

The Amendment Act and Regulation 76/2005 can be accessed through the Pension Commission

website at: http://www.gov.mb.ca/labour/pension/pensio...nsionlegis.html

The amendment gives Manitoba retirees greater control over managing their retirement savings by

permitting a one-time transfer of locked-in pension funds to a Registered Retirement Income Fund

(RRIF) that is not locked-in.

Further, the new legislation protects the rights and interests of spouses and common-law partners,

both present and former. A transfer can only be made with the informed written consent of a

cohabiting spouse or common-law partner, after he or she receives the required documentation

concerning the proposed transfer. Further, an amount sufficient to satisfy a Pension Benefits Act

credit splitting claim of a former spouse or common-law partner must be retained. It also ensures

LIF or LRIF owners who have family support obligations which must be met are not able to avoid this

responsibility by making a transfer.

The legislation will also ensure that the funds in the RRIF are not attachable by creditors but are

subject to attachment for purposes of satisfying Family Property Act claims and maintenance orders.

SUMMARY OF CHANGES

Effective May 25, 2005, a LIF or LRIF owner who is at least age 55 may apply for a one-time

transfer under section 21.4 of the Act, which is defined under the regulation as a “prescribed

transfer”, of an amount up to 50% of the balance in one or more of his or her LIFs or LRIFs to a

Registered Retirement Income Fund (RRIF) as defined in the Income Tax Act (Canada), the contract

for which meets the requirements of the regulation (“prescribed RRIF”).

NOTE: An application for a prescribed transfer may only be made in respect a LIF or LRIF that is

locked-in under The Pension Benefits Act of Manitoba and regulation.

-2-

According to section 21.4(4) of the Act, the maximum amount available for a prescribed transfer may

be affected by:

o any amount that is payable to a former spouse or common-law partner as required by the

credit splitting provisions under section 31(2) of The Pension Benefits Act,

o an order issued by the Maintenance Enforcement Program of the Department of Justice

under The Garnishment Act to enforce a maintenance order, or

o an order issued by the Maintenance Enforcement Program under section 59.3 of The

Family Maintenance Act to preserve assets.

The financial institution must provide the applicant and, if he or she was a pension plan member, his

or her cohabiting spouse or common-law partner with information specified by the regulation that

includes the maximum amount available for a prescribed transfer.

A prescribed transfer cannot be made by an applicant who was a pension plan member unless the

spouse or common-law partner consents in writing by completing the “Spouse’s/Common-law

Partner’s consent to transfer to a Registered Retirement Income Fund Contract”. This form is

required to form a part of the application form. The form including, “Comments and Instructions”,

can be accessed through the Pension Commission website at

http://www.gov.mb.ca/labour/pension/forms/...usalconsent.pdf

The applicant must file an application to the financial institution which must contain the information

required under subsection 18.2(5.3) of the regulation, including a written statement from the

Superintendent that the applicant has not previously made a prescribed transfer, and if required, the

written consent of the cohabiting spouse or common-law partner.

Effective May 25, 2005, no amount may be paid out of a LIF or LRIF as temporary income.

However, an owner who prior to May 25, 2005 was entitled to be paid temporary income from his or

her LIF or LRIF in 2005 and does not make an application for a “prescribed transfer” from that LIF or

LRIF, may continue to be paid temporary income until the end of 2005 based on the method of

payment in that LIF or LRIF contract. Should the owner however subsequently make an application

for a “prescribed transfer” from that LIF or LRIF, no further temporary income can be paid despite

any provisions that apply to that LIF or LRIF contract.

Financial institutions currently on the Superintendent’s List of Financial Institutions with approved

forms of LIF or LRIF contracts that include temporary income are required to remove the temporary

income provisions from their standard form of contract when the contracts are next amended. In the

interim, institutions must administer these contracts as required by the new legislation.

Financial institutions will not be required to file a standard form of prescribed RRIF contract with the

Pension Commission in order to accept prescribed transfers, but must ensure the contract complies

with the regulation.

If you have any questions you may contact us at:

The Pension Commission of Manitoba

1004 – 401 York Avenue

Winnipeg MB R3C 0P8

Phone: (204) 945-2740

E-mail: [email protected]

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New update from Alberta Finance.....August 9, 2006

Albertans age 50 and over have increased access to locked-in retirement savings

Edmonton... Albertans leaving a Registered Pension Plan will have better access to their retirement savings as the result of changes to Employment Pension Plans Act regulations. Effective November 1, people have a one-time option to unlock up to 50 per cent of their locked-in pension contributions after exiting an eligible pension plan.

"Albertans are looking for greater flexibility in managing their retirement savings," said Finance Minister Shirley McClellan. "The regulation changes strike the right balance. Half of the eligible retirement savings will remain locked to ensure Albertans have a stable source of income during their senior years, while the remaining amount can be unlocked to allow increased individual control over retirement income."

To qualify, Albertans must be at least 50 years of age and have written consent from their pension partner. The unlocking option is exercised when income starts to be withdrawn from locked-in retirement savings. This occurs when funds from a Locked-in Retirement Account (LIRA) or eligible pension plan are transferred to a life annuity, Life Income Fund (LIF) or Defined Contribution Retirement Income Account (DC-RIA).

Unlocked assets can be transferred to another tax sheltered vehicle like a Registered Retirement Savings Plan or taken as a cash payout that is subject to taxation.

Holders of an existing LIF or Locked-in Retirement Income Fund (LRIF) also have the option of unlocking 50 per cent the fund's value, but must make their decision by December 31, 2007. After that date, unlocking can only be done when a person is opening a new LIF, life annuity or DC-RIA.

Effective August 10, regulation changes governing LIFs will allow increased access to the remaining locked-in funds. Maximum yearly withdrawal limits have been enhanced to allow greater flexibility during fluctuating market conditions. LIF holders will no longer be required to convert the fund to a life annuity at age 80 and pension partners will be allowed to waive beneficiary status.

The regulation changes also allow LIFs and LIRAs to be invested in a personal or close relative's mortgage.

The LIF improvements have eliminated the need for LRIFs, which will be discontinued effective December 31, 2007.

Financial institutions will be receiving information about the regulation changes and can assist Albertans who are eligible for the new options. Additional information is available through the Alberta Finance website at www.finance.gov.ab.ca/publications/pensions/index.html.

- 30 -

Attachments: Backgrounder and FAQs

Media enquiries may be directed to:

Marie Iwanow

Alberta Finance

Ph: (780) 422-2126

Backgrounder

--------------------------------------------------------------------------------

August 9, 2006

Locked-in account basics

Under terms of the Employment Pension Plans Act and regulations, employees who have participated in a Registered Pension Plan are entitled to pension benefits, even if they leave their employer before retirement. They can choose either to receive a monthly pension from the plan when they retire, or to receive a one-time lump sum representing the full value of their pension, including employer contributions (if they have been with the employer for at least two years).

Pension money transferred to an employee is "locked-in," meaning it cannot be paid out in cash. Instead, it must be used to provide retirement income and is transferred into a restricted RRSP in the employee's name, called a Locked-In Retirement Account (LIRA), where the money can be invested and earn interest.

At age 50 or older, a person can begin to receive income from the LIRA by transferring the money into a life annuity or a Life Income Fund (LIF).

Some pension plans also allow funds to be transferred directly to a life annuity or LIF when a person wants to begin receiving retirement income.

Because a life annuity or LIF is designed to provide retirement income for the remainder of a person's lifetime, the size of withdrawals from the fund are limited.

In 2003 and 2005, the Government of Alberta issued discussion papers about pension topics to solicit feedback from industry stakeholders and the general public. With the regulation changes, the government has addressed concerns by locked-in account holders that maximum withdrawals allowed from products such as a LIF were too low, especially for people who retired early and who are not yet receiving benefits from the Canadian Pension Plan or Old-Age Security.

Prior to the regulation changes, 100 per cent of LIRA funds had to be converted to a life annuity or LIF at retirement.

Under the new rules, when people age 50 and over transfer funds to a LIF or life annuity, they have a one-time option to "unlock" up to 50 per cent of the locked-in funds. This money can be taken as cash or transferred into a tax sheltered vehicle such as a Registered Retirement Savings Plan (RRSP). Cash payouts are subject to taxation.

The new rules will also allow the unlocking of 50 per cent of accounts in a defined contribution pension plan that offers members (over age 50) the option of receiving retirement income through a Defined Contribution Retirement Income Account (DC-RIA). The DC-RIA is now permitted as the result of other changes to the Employment Pension Plans Act and regulations. Prior to the rule changes, employees enrolled in a defined contribution pension plan had to transfer their money into a LIRA, LIF or life annuity upon retirement.

- 30 -

Media enquiries may be directed to:

Marie Iwanow

Director of Communications

Alberta Finance

Ph: (780) 422-2126

Backgrounder

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August 9, 2006

Frequently asked questions

Q. Who is eligible to take advantage of the new unlocking regulations?

A. You must be 50 years of age or older and be transferring money from a Locked-in Retirement Account or an eligible Registered Pension Plan into a life annuity, Life Income Fund or Defined Contribution Retirement Income Account. Written consent from a pension partner (married or common-law spouse) must also be provided.

Q. What is considered an eligible Registered Pension Plan?

A. The money must have been earned by an employee working in Alberta for an employer other than a federally-regulated employer, which includes any federal government body or the banking, shipping, telecommunications and interprovincial transportation industries.

Q. What happens if I contributed to a pension plan while employed in Alberta but I have now left the province?

A. If you have exited a pension plan in Alberta, you are still eligible to exercise the 50 per cent unlocking option when you want to begin receiving retirement income from the locked-in retirement savings. You must be 50 years of age or older and have written consent from your pension partner.

Q. What is a Locked-in Retirement Account (LIRA)?

A. If you are an employee who is leaving a Registered Pension Plan, you are entitled to a portion of the money held in the plan on your behalf. Vested employees, who have participated in the pension plan for at least two years, are entitled to both the employee and employer contributions, plus interest. You may transfer the pension money into a Locked-in Retirement Account, sometimes known as a locked-in RRSP, to ensure the money is used for its intended purpose of retirement income. As owner of the LIRA, you make decisions about investments, but are not allowed to withdraw income until you reach age 50, when the LIRA can be converted to a life annuity or a Life Income Fund.

Q. What is a life annuity?

A. A life annuity is a contract with a life insurance company in which you pay the life insurance company a set amount of money, and in return, the company agrees to pay you a guaranteed monthly amount of income for as long as you live. The size of the monthly payment cannot be altered after the life annuity is activated.

Q. What is a Life Income Fund (LIF)?

A. A Life Income Fund, which is established through a financial institution such as a bank, is designed to provide retirement income. The amount of income that can be withdrawn from the fund can vary each year. The minimum amount that must be withdrawn is established through the federal Income Tax Act, while the maximum withdrawal is established by Alberta's Employment Pension Plans Act and includes factors such as your age and prevailing interest rates.

Q. What happens if I already have funds deposited in a LIF?

A. Holders of an existing LIF have the option of unlocking up to 50 per cent of the value of the fund, beginning November 1, 2006. The option must be exercised by December 31, 2007.

Q. What happens if I miss the deadline for an existing LIF?

A. If the holder of an existing LIF does not exercise the 50 per cent option by the December 31, 2007 deadline, the entire value of the fund will remained locked for the duration of the fund.

Q. What happens if I already have funds deposited in a life annuity?

A. Holders of an existing life annuity do not have the option of unlocking up to 50 per cent of the fund's value. The guaranteed monthly income established through an annuity contract is based on the fund's full value so it cannot be altered and must remain locked-in.

Q. What can I do with funds once they are unlocked?

A. The money can be transferred to a Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF), or taken as cash. Cash is subject to taxation.

Q. What happens if I really need the money right now and I want to access my locked-in retirement savings prior to age 50?

A. The Financial Hardship Unlocking Program allows access to locked-in funds, prior to age 50, in limited financial situations such as a temporary loss of income or an inability to pay rent. An application is made through the Superintendent of Pensions office.

Q. What is a Locked-In Retirement Income Fund (LRIF)?

A. A Locked-In Retirement Income Fund, similar to a LIF or life annuity, is designed to provide retirement income from money transferred from a LIRA. The maximum withdrawal allowed from the fund can vary each year and is based entirely on investment earnings.

Q. Why are LRIFs being discontinued?

A. Regulation changes have combined all the advantages of an LRIF with a LIF. LIF holders can now make larger withdrawals in years of strong investment returns. As a result, the need for LRIFs has been eliminated.

Q. What happens if I already have established a LRIF?

A. LRIFs are to be transferred to another locked-in product such as a LIF or life annuity by December 31, 2007. Holders of existing LRIFs are also eligible for the 50 per cent unlocking option.

Q. What is a Defined Contribution Retirement Income Account (DC-RIA?)

A. A DC-RIA is very similar to a Life Income Fund, the difference is that a DC-RIA is only available to members of a defined contribution pension plan that offers this option.

Q. What is a Defined Contribution Pension Plan?

A. There are two types of pension plans, a defined benefit pension plan and a defined contribution pension plan. In a defined benefit pension plan, the benefit received by a retired person each month is calculated by a formula based on factors such as years of service with the company and average yearly income. In a defined contribution pension plan, a formula is not used to determine the monthly pension amount. The benefits are based exclusively on the amount of employer and employee contributions to plan, plus interest earned through investment of those contributions.

Q. Why is pension partner consent required before the unlocking option is exercised?

A. By law, pension partners (married or common-law spouse), are entitled to a portion of pension benefits so decisions that impact pension income must have consent from the pension partner. Consent forms are available at the website at http://www.finance.gov.ab.ca/publications/...ions/index.html.

Q. Where can I find out more information?

A. Financial institutions will be receiving information about the regulation changes and can help their eligible clients take advantage of the new unlocking option. Additional information is available on the Alberta Finance website at www.finance.gov.ab.ca/business/pensions.

EXAMPLE OF HOW THE UNLOCKING OPTION IS EXERCISED:

John Doe has been working for the same company and contributing to its pension plan for 25 years. At age 45, he decides to change jobs. He is entitled to keep his contributions and the contributions made on his behalf by his employer to the company pension plan, which equal $100,000. The funds are transferred to a Locked-in Retirement Account (LIRA) in John Doe's name, where the funds are invested and earn $10,000 in interest over the next 10 years. At age 55, John Doe decides to retire and start receiving income from his locked-in retirement savings. At this point, he has the option of unlocking up to 50 per cent of the $110,000 contained in his Locked-in Retirement Account. He can take up to $55,000 out of the locked-in account as cash or put it into an RRSP or RRIF. The remaining money must be transferred to a Life Income Fund or life annuity.

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Copyright©; 2006 Government of Alberta

_________________

If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace. We ask not your counsels or arms. Crouch down and lick the hands which feed you. May your chains set lightly upon you, and may posterity forget that ye were our countrymen. -- Samuel Adams, speech at the Philadelphia State House, August 1, 1776--"If You Haven't Suffered Enough It Is Your God Given Right To Suffer Some More" Wm. Aberhart Alberta Premier

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geoffrey; Tell Me why in H--- should a person have to borrow funds when You have plenty in a pension plan that the government wants to reap for their own benefits.

All that is needed is to convince the government to give the people control of their own money.

geoffrey ??? that was just an example!

Actually, it'd likely be better for you to borrow the funds.

You've got shitloads of assets, your going to get prime plus one... that costs you 7%. In a properly invested portfolio your likely to gain 10% in that same time frame these days.

So what up? Take my advice, keep your money locked away and just borrow. It's actually cheaper.

I've got numerous student lines of credit that I rack up and use the money to buy investments. I make 12-14% on them, and pay 5.5% because they are nice and give students a good rate. If I only qualified for government loans I'd be making even more. I make 7-9% without even investing my own money.

Hi geoffrey; Your Ideas sound good. The big issue about these funds being locked in isn't about taking money out for any specific reason. Some times a person might want to take them out to expand their business and therefore get a even bigger return on their money then if they were in a locked in fund.

It isn't about pulling Your money out period. It is about having these funds unlocked so that You can decide what You want to do with Your own Money. A person can invest this money unwisely even in these unlocked in funds and lose all their money. So what would be the difference if they were unlocked.

No difference except You would have control of Your own money instead of the government which forces you to leave most of the principle in your account.

This way they are assured of a big tax grab when the money passes to your estate.

As it is now Your children dont exist according to the government .They want to tax it first . If the money could be passed to Your children and if they would be able to transfer it into a tax sheltered plan .There would be less of a problem.

As You know the government likes to tax us to death. I have no problem paying taxes and I expect to pay taxes on any money I draw.

Other Provinces have changed . Why not Ontario

Regards Bill C.

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Hi MadMax;

I would like to also say there is a quite a bit of Liberal support for this issue.

NDP Support And Conservative Support.

I have received a quite a few letters from Liberal, Conservative, And NDP members that also agree that this legislation needs to be changed and these funds unlocked'

As You know though they are not always allowed to vote as they feel . But to vote as their leader tells them.

Some Democracy we have hey.

Take Care Bill Costello

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Hi This is to the people that hold a locked in pension from Ontario that have e-mailed me.

My address folder with the address that I used to answer to people who mailed me about unlocking locked in pensions disappeared. Sorry!

I am switching to a Yahoo e-mail address . That way I will be storing the address on line and they wont get lost.

My new address is [email protected]

We have started a mail out program to try and reach as many people with locked in pensions as possible and I would have mailed this out personally but with no address I cant.

If a person would like to forward this on through their mail .Just copy and paste this in your letter

Thank You Bill Costello

It has a heading of " We need your Help"

Please pass this on to as many people as you can.

You or some one in Your family or a friend or their family may be in this situation of having money locked into a locked in pension plan ( LIF, LIRA, LRIF ) It does not matter what province You live in or what Country You live in. If You have one of these plans in the Province of Ontario it concerns You. If You have moved elsewhere the plan still needs to be Governed by Ontario rules.

This is Your OWN money not OAS or CPP.

A number of people , CARP (Canadian Association of Retired Persons) , And Andrea Horwath MPP are trying to convince the Ontario government to unlock these pensions for the people 55 Years and older when their pension plan is transfer into a locked in fund where they are able to draw on it.

We would like these funds transferred into a RRIF like any ordinary RRSP is allowed to be placed.

The MPP,s of Ontario Unlocked these funds for themselves in 1999 but did not unlock them for anybody else. ( Unbelievable but TRUE )

Saskatchewan unlocked these funds 100% for their people.

Manitoba unlocked 50%

Alberta unlocked 50% But Ontario refuses to unlock . The drive to unlock these funds has been going on for some time now but with the momentum we have with TV interviews and newspaper coverage, The Private Members Bill The election coming up. Now is the time to really put the pressure on.

Andrea has presented a private members bill to accomplish this but needs the backing of the MPP's of the house to make it law.

The way it works now is the government controls the purse strings on money that You put away for Your retirement. They just allow you to take basically the interest on the principle. This is all Your money when it is transferred into a locked in account. When You and Your spouse pass away and the money is passed to your estate most of the money will be still in there ( unless You are lucky to live to be 90 +) Then the government will be able to tax it at a high rate as everything comes due to be taxed at You and Your spouses death ( Plain theft as far as I am Concerned)

Way's a person can help are. Sign the online petition. ( You do not need to be a senior or in province to do this and you do not need to hold a locked in pension at this time You may work for a company that has one in the future. )

http://www.petitiononline.com/WRC101/petition.html

You can contact Your own MPP and tell him to support bill 175 the bill to unlock locked in pensions.

You can E- Mail the Premier Dalton McGuinty

You can E-Mail the Finance Minister Greg Sorbara and tell all of them You want these pensions unlocked.

Hon. Dalton McGuinty 1795 Kilborn Ave

Ottawa ON K1H 6N1

Tel : 613-736-9573

Fax : 613-736-7374

email : [email protected]

Hon Greg Sorbara Unit AU8 - 140 Woodbridge Ave

Woodbridge ON L4L 4K9

Tel : 905-851-0440

Fax : 905-851-0210

email : [email protected]

Further information on

the provinces plans can be found in this Forum and the arguments for and against unlocking these funds

http://discuss.50plus.com/ubb/Forum...L/000830-6.html

Thank You Bill Costello

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Hi This is a post Suffering Senior posted in another forum and I thought I would pass it on,

Suffering Senior;

"The cruelest lies are often told in silence." I believe this quote ... (Robert Louis Stevenson) ... is very applicable to our provincial politicians today ... relative to Bill 27 and the exclusive financial privilege extended to 61 MPPs (of all party affiliations) ... and ... to the recent obscene pay increase (25%+) that MPPs gave themselves just before Christmas.

The following words are those of Mr. Dalton McGuinty (at that time ... Leader of the Opposition) ... as he was engaged in dialogue with then Minister of Finance and Deputy Premier, Mr. Ernie Eves.

These words were spoken in the House on Wednesday, December 15, 1999.

"My question is for the Minister of Finance. Minister, with reference to Bill 27, we have discovered deep down inside a delightful Christmas gift that you intend to give a select group of MPPs in this Legislature. I want to make it perfectly clear in this House today that I and my party will have none of it. Your special provision says that MPPs are going to have special access to their pension funds. You're going to give a right to MPPs that none of the other 11 million Ontarians are going to enjoy. Your new bill will allow some of our MPPs to have instant access to their pension plan at the age of 55 when you're going to give no other Ontarian that same said right. Minister, how can you possibly justify this double standard?" (Legislative Hansard, L029A Wed 15 Dec 1999, Page 1350)

After Mr. Eves responded, Mr. McGuinty then said the following:

"So that Ontarians who are paying very close attention to these proceedings here today, understand what we're talking about, everybody outside of this Legislature who's not part of the special group about to be the recipient of a special gift from this government has to be able to plead financial hardship. They've got to go before the superintendent of financial services and they've got to get down on bended knee and plead for immediate access to their locked-in pension fund. There is no such requirement to be placed on MPPs. What you are doing here is giving yourself a right, a benefit, a privilege which is not to be enjoyed by any other Ontarian.

Again, Minister, I ask you, how can you possibly justify this double standard? Why is it that MPPs, from your perspective, are entitled to a very special right and a special privilege nobody else is entitled to enjoy?" (Legislative Hansard, L029A Wed 15 Dec 1999, Page 1350)

After another response by Mr. Eves, Mr. McGuinty said the following:

"I must say that my heart bleeds for this Minister of Finance who, when this pension was changed, was left with the paltry payout of close to $1 million at the expense of taxpayers. That's what we're talking about here today. That's what this is all about." (Legislative Hansard, L029A Wed 15 Dec 1999, Page 1350)

After an interjection by the Speaker, Mr. McGuinty then said the following:

"Minister, your arrogance is showing. First your Premier doubles the size of his staff, then he awards them a 30% pay hike, then he works a three-,maybe sometimes a four-day workweek, and now we have a piece of legislation being rammed through this Legislature-there will be no public hearings-and it's going to give a select group of MPPs, yourself included, Minister, and also your Premier, a special entitlement to immediate access to a locked-in retirement account at the age of 55, a right to be enjoyed by no other Ontarian. I ask you again, Minister, how you can justify this double standard?" (Legislative Hansard, L029A Wed 15 Dec 1999, Page 1350)

To all seniors, especially those holding locked-in pensions, I say the following:

(i) Despite Mr. McGuinty's words of strong protest ... why is it that he and his party have done nothing towards giving all seniors the same privilege of unlocking their pensions as was given to 61 MPPs courtesy of Bill 27 ... even though Mr. McGuinty has been Premier since 2003?

Since members of all parties received this exclusive benefit, it is my contention that Mr. McGuinty, Mr. Tory and Mr. Hampton would all prefer to just not talk about it ... so much for protecting the interest of seniors ... that they were elected to serve ... not exploit. The cruelest lies are indeed told in silence!

Also, with reference to the first quote of Mr. McGuinty's ... "... we have discoverd deep down inside a delightful Christmas gift ... "

To all citizens of Ontario, including those seniors holding locked-in pensions ... Mr. McGuinty apparently had no reservations about giving all MPPs another delightful Christmas gift this past Christmas ... a 25% pay increase. At the same time though, it was quite acceptable that the Financial Services Commission of Ontario only raise the low income threshold from $28,066.67 to $29,133.33 ... a 3.8% increase ... (a locked-in pensioner can only apply for additional access to his or her pension if annual income, before taxes, is below this threshold).

Mr. McGuinty and Mr. Tory never mentioned this increase when talking about their own need ... for a 25%+ pay increase for MPPs.

Again, the cruelest lies are indeed told in silence.

Seniors ... keep the pressure on!!! This whole Bill 27 debacle ... is obscene ... given that the privilege 61 MPPs received of being able to have their pensions unlocked ... cost taxpayers in excess of 20 million dollars. (See the following article in the December 16, 1999 Globe and Mail, Metro edition, Headline: Pension bill to benefit MPP clique, Mc Gunity says, Byline: Richard Mackie, Queen's Park Bureau)

Keep going to your MPP offices ... keep writing letters and keep the pressure on!!!

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Hi This is an article that Carole D wrote and had printed in the Toronto Globe & Mail.

Are you a Boomer that has changed jobs

over the years and ended up with pension plan that was moved to a Locked in

Retirement savings called a LIRA. Well before you retire you might want to

look at this very closely. The goverment of Ontario did not just lock it up

until you retire but has made it impossible for you to take this money out

and spend it. Although they did allow the MPP's to move their LIRA into

their RRSP, the rest of us were not given that privilege. I think if we are

such a large portion of today's population we had better make some noise or

we will be retiring with much less income than we think. Unfortunately our

goverment decided that they should decide for us, how much of OUR money we

could have at retirement. I knew that the company pension that I paid into

was moved into a LIRA when the company went Bankrupt but what I did not know

was that it is basically locked up forever and you cannot use this money

when you retire. You are only allowed to take out around 6% which is

basically the interest yearly. I paid my hard earned money for this pension

and think this is outright theft. I believe many people out there are in the

same predicament and just dont know it yet. Saskatchewan has allowed people

with a LIRA to move 100% of it to an RRSP and Manitoba has allowed people to

move 50% of it to an RRSP. I think all of us in Ontario need to get the

pressure on to get access to our retirement savings as well. If we make

enough noise we can make it happen. After all I think the next Provincial

Election is not that far away. There is a lot of information about these

LIRA's on the net. Check it out. And take some time to check if you have one

of these.You may have to re-think your retirement if you are depending on

this money to retire with.

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