Pension Transfers and Withdrawals
If you leave a job and end your membership in a pension plan before retirement, you have the choice to keep any vested pension funds you have accumulated held in the pension, or to have the value transferred to another pension plan, to a locked-in retirement savings arrangement, or to have a deferred life annuity purchased for you. Vesting in a pension plan occurs at a minimum on five years of continuous employment or two years of pension plan membership—whichever is sooner. Some pension plays may have more generous provisions. If you leave a job and end your membership in a pension plan before you are vested, you are entitled only to a return of your own contributions plus interest.
When your employment ends or is terminated, your membership in the pension plan ends as well. The employer has 30 days from the end of your employment to provide you with a statement containing information set out in subsection 16(1) of the General Regulation under the Pension Benefits Act. This includes information such as:
- the name of the plan and its registration number;
- your name, mailing address, social insurance number and date of birth;
- the date on which you became a member, the number of years of continuous employment and, if applicable, the number of years of employment credited under the plan;
- your retirement date under the plan;
- the periodic amount of the deferred pension you are entitled to under the plan on termination of employment and any options respecting the deferred pension;
- the amount of any accumulated additional voluntary contributions;
- the amount of any excess contribution you made;
- if applicable, the formula for reducing the deferred pension by reason of payments under the Canada Pension Plan, the Quebec Pension Plan or the Old Age Security Act and the amount of the resulting reduction to the periodic amount of the deferred pension;
- an explanation of any indexation;
- the commuted value of the deferred pension;
- explanation of the benefit payable on death if you were to die prior to payment of the deferred pension;
- an explanation of the pension payable if you or your spouse were to die after the commencement of payment of the pension;
- an explanation of any other benefit you are entitled to.
You must advise your former employer of your decision within 90 days after receipt of the employer's notice. The employer must then comply with your election option within 30 days after receipt. For full details please review Regulation 91-195 General Regulation - Pension Benefits Act.
If you choose to have your vested funds transferred to a retirement savings arrangement, you can choose between a locked-in retirement account (LIRA), a Life Income Fund (LIF), or a life or deferred life annuity.
Before transferring your pension to a locked-in retirement savings arrangement, be sure you are dealing with an authorized fund. Check our list of financial institutions authorized to sell Locked-in Retirement Accounts (LIRA), Life Income Funds (LIF) and Annuity contracts under the Pension Benefits Act.
Locked In Retirement Account (LIRA)
A LIRA is often referred to as a locked-in RRSP. A LIRA is an investment account that holds locked-in pension funds until you transfer them to a pension plan, a life income fund, or you purchase a life or deferred life annuity. You cannot make periodic withdrawals from a LIRA. When you wish to start drawing an income from funds in your LIRA, you must first transfer the funds to either a Life Income Fund (LIF) or a life annuity. Restrictions apply to all unlocking provisions, please see below.
Life Income Fund (LIF)
A LIF is similar to a Registered Retirement Income Fund (RRIF) but with certain restrictions. These are often referred to as a locked-in RRIF. You must make a minimum withdrawal each year after the year you open the LIF. There is also a maximum amount you can withdraw each year.
Click to view our current Example of Calculation - Transfer from LIF to RRIF (PDF) effective 1 January 2023.
In New Brunswick, you do not have to wait until you turn 55, you can start receiving payments from a LIF at any age. The payments allowable from your LIF are determined by the minimum and maximum withdrawal limits set out in the legislation. The maximum amount that you can withdraw each year from your LIF varies according to your age and current long-term interest rates. View our current LIF Maximum withdrawal table 2023 (PDF).
Life or deferred life annuity
A life annuity is an insurance product that provides a series of payments from the date of purchase until the date of death of the owner (or the owner’s spouse or common-law partner if it is a joint and survivor annuity). The annual payments are determined by the lump-sum amount available to purchase the annuity and by annuity purchase rates at the date of purchase. A deferred life annuity is a life annuity where the annual payments are put off for a certain time after purchase.
Payments from a life or deferred life annuity cannot begin until you are within 10 years of the normal retirement date established under the pension plan from which the funds were transferred.
You may be able to withdraw the balance or a portion of your pension account early if you qualify for one of the following unlocking provisions.
Reduced life expectancy due to Significant physical or mental disability
You may withdraw the balance of your account in whole or in part, and receive a payment or a series of payments, if you have a reduced life expectancy. To qualify, a physician must certify (in writing to the financial institution that is party to the contract or the administrator of a pension plan) that you suffer from a significant physical or mental disability that considerably reduces life expectancy. The physician must use the underlined wording in order to comply with subsection 33(2) of the Pension Benefits Act and subparagraphs 21(2)(d), 22(1)(a), 23(1)(i) and 25.4(1) of Regulation 91-195. If you have a spouse or common-law partner, a waiver in Form 3.01 must be completed.
You may withdraw the balance of money in your pension plan, locked-in retirement account (LIRA), or life income fund (LIF) if all three of the following criteria are met:
- Neither you nor your spouse or common-law partner are Canadian citizens
- Neither you nor your spouse or common-law partner are residents of Canada
- Your spouse or common-law partner (if applicable) signs a spousal or common-law partner waiver (Form 3.5)
One-time partial unlocking from a LIF to a RRIF
You may make a once-in-a-lifetime withdrawal from a LIF of the lesser of three times the annual amount or 25 per cent of the balance in the LIF. You may only use this option if you have not previously transferred an amount under this provision. In the application you must make a sworn declaration certifying that the transfer is being made freely and voluntarily and not because of any judgment that anyone has against you. This partial unlocking from a LIF to a RRIF requires an application, which must be done by your financial representative using FCNB’s portal. Your spouse or common-law partner (if applicable) must sign a declaration waiving their entitlement.
Click to view our current Example of Calculation - Transfer from LIF to RRIF (PDF) effective January 1st 2023.
Small balance transfer
You can apply to unlock small balances contained in a pension plan or a LIRA. The formula to determine what qualifies as a small balance is based on your age. For example, to qualify in 2020, at age 60 your total locked-in assets must be less than $17,546. For the two years prior to your application, your Pension Adjustment amount (reported on your T-4) must equal zero. This means if you have recently been a member of a pension plan you will not qualify under this provision. You must complete Form 3.6 and Form 3.7 (Consent of Spouse or Common-Law Partner to Withdraw from a Locked-in Retirement Account, if applicable) to process this type of unlocking.