In general, money transferred from a registered pension plan into a locked-in account, such as a locked-in retirement account (LIRA), life income fund (LIF) or locked-in retirement income fund (LRIF), can only be used to provide income after retirement.

In certain cases of financial difficulty, however, you can apply for special access to a limited amount of the funds you hold in one or more of those accounts. This is called “financial hardship unlocking”.

There are four categories of financial hardship that may be considered when making an application:

  1. Lower than expected income
  2. Payment of first and last months’ rent
  3. Arrears of rent or debt secured on a principal residence (such as a mortgage)
  4. Medical expenses

How to apply

All financial hardship unlocking applications must be made on FSRA forms. Download and complete the form that corresponds to your application category and forward it to your pension administrator.

Download financial hardship unlocking forms

Review and approval

Review and approval of your application will be handled by the financial institution that holds and administers your locked-in accounts. They will determine if your application meets the legal requirements set out under the category for which you are applying, and forward the appropriate payment, if approved.

What happens when an application is approved?

If your application is approved, there are a number of points to keep in mind:

  1. Payment
    Once approved, money is paid in a lump sum, only and cannot be transferred to a tax-deferred account, such as an RRSP or RRIF.
  2. Withholding tax
    The amount you are approved for is subject to a withholding tax by the CRA (Canada Revenue Agency), variable to the amount you withdraw.
  3.  Administration fees
    Your financial institution may charge administration fees, which will be deducted from your payment.

How it works

If you are approved for a $20,000 withdrawal, the CRA will get 30% ($6,000). If your financial institution charges a $50 fee (for example), you will receive a lump sum payment of $13,950.

NOTE: If you need the full $20,000, you must apply for a greater amount – but cannot apply for more than the maximum amount to which you are entitled.

Restrictions

  • The amount you withdraw is considered income, and may affect your eligibility for other government assistance programs. 
  • Money withdrawn from a locked-in account will no longer be considered protected from creditors, and may be seized.

Learn more

Read our financial hardship unlocking guide [PDF]
Financial hardship unlocking FAQ