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Canada Non-Resident Planning: A Guide to Retirement Account Unlocking

February 21, 2021 By Cardinal Point Wealth

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  • Unless eligible for rollover to a RRSP or RRIF account, the amount withdrawn is considered income, subject to income tax, and may affect your eligibility for government benefits or assistance programs.
  • Funds withdrawn from a locked-in account will no longer be considered protected from creditors.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
If applicable, signed Spousal Waiver of entitlements (Form 1)
Yes
Alberta If applicable, signed Spousal Waiver (Form 6 (pensions) or Form 13
(Locked-In Account))
Yes
Saskatchewan Certificate of Non-Residency (Form 4)
If applicable, signed Spousal Waiver (Form 5)
Yes
Manitoba If applicable, signed Spousal Waiver (Form 3) Yes
Ontario1 Complete and sign Form 5
For pensions, if applicable, signed Spousal Waiver (Form 4.2)
No
New
Brunswick
If owner or spouse are Canadian citizens, non-resident unlocking is not available
If applicable, signed Spousal Waiver (Form 3.5)
Yes
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.

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“Cardinal Point” is the brand under which dedicated professionals within Cardinal Point Capital Management, ULC provide financial, tax and investment advisory, risk management, financial planning and tax services to selected clients. Cardinal Point Capital Management, ULC is a US registered investment advisor and a registered portfolio manager in Canada (ON, QC, MB, SK, NS, NB, AB, BC). Advisory services are only offered to clients or prospective clients where Cardinal Point and its representatives are properly registered or exempt from registration. This website is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital.