Nova Scotia unveils changes to financial hardship unlocking – financial institutions to receive applications starting July 1, 2021
Dante Manna with the assistance of Kali Robertson (summer student)
The Nova Scotia Government recently released regulations reassigning the authority for administering financial hardship unlocking in the province. Effective July 1, 2021, individuals will apply directly to their financial institution for approval to withdraw money from a locked-in retirement account (“LIRA”) or life income fund (“LIF”) in circumstances of financial hardship.
Nova Scotia will be the second province in Atlantic Canada, following Newfoundland and Labrador (as noted in our recent Client Update), to streamline the financial hardship unlocking program through financial institutions.
Changes to unlocking
The responsibility of administering financial hardship unlocking applications was previously borne by the Nova Scotia Superintendent of Pensions, as provided under s. 91 of the Pension Benefits Act, S.N.S. 2011, c. 41 (“the Act”) and further detailed in the Pension Benefits Regulations, N.S. Reg. 200/2015 (“Regulations”). However, as a result of Bill 87, Pension Benefits Act (amended) passed by the province on April 19th, 2021, and the newly released amendments to the Regulations, that responsibility effectively shifts to financial institutions as of July 1, 2021.
The government has made some simplifying changes to the criteria and process. Several documentation requirements, such as the requirement to provide recent income receipts, have been loosened, with s. 219 of the Regulations providing the financial institution authority to request any additional documentation it considers “necessary to assist in understanding the documents or verifying their authenticity”. The amended Regulations will allow the withdrawal of the remaining amount, if unlocking leaves the LIF or LIRA balance under $500. Finally, unlocking applications will only be permitted once per “calendar year”, rather than “12-month period”.
On the other hand, for applications where a physician must provide medical advice, the amended Regulations require such physician to be licensed in the jurisdiction where the applicant resides (currently, they may be licensed in any Canadian jurisdiction). Notably, this change also applies to shortened life expectancy unlocking applications, including those made under pension plans.
New required LIRA or LIF terms
Financial institutions should also take note that, effective July 1, 2021, all LIF or LIRA contracts are required to include the following terms (which are deemed for contracts that do not include them):
- the financial institution is entitled to rely upon the information provided by the owner in an application to withdraw money from their LIRA or LIF;
- any application which meets the requirements of the Act and Regulations constitutes authorization to the financial institution to make the payment or transfer from the LIRA or LIF in accordance with the Act and Regulations;
- the value of the assets in the LIRA or LIF owned by the owner on the date they sign an application must be determined using the most recent statement about the LIRA or LIF given to the owner and dated no earlier than one year before the date the owner signs the application; and
- the financial institution must make the payment to which the owner is entitled no later than 30 days after the date the financial institution receives the completed application and accompanying documents and any additional information provided under s. 219 of the Regulations.
New guidance for financial institutions
Financial institutions are encouraged to consult sections 211 to 230 of the Regulations when reviewing financial hardship unlocking applications. However, the Finance and Treasury Board has provided a comprehensive guide and checklist to further assist financial institutions when processing applications.
Effective July 1, 2021, all application forms must be submitted to the financial institution holding the funds, and forms given to the Department of Finance will no longer be accepted. There are no substantial changes to the application process under the new version of Form 12; any administrative matters requiring attention are noted in the guide and checklist.
Considerations for plan sponsors and administrators
Financial hardship unlocking still does not apply to money held within a pension fund. Nevertheless, plan sponsors and administrators may still expect inquiries from their members about accessing their pension, thus presenting an opportunity to educate regarding locking-in and withdrawals from retirement savings arrangements.
This article is provided for general information only. If you have any questions about the above, please contact a member of our Pensions & Benefits Group.
Click here to subscribe to Stewart McKelvey Thought Leadership.
By Kimberly Bungay On April 1, 2023, the Nova Scotia government will proclaim into force Bill 226, which amends the Companies Act (the “Act”) to require companies formed under the Act to create and maintain…Read More
Abuse of sick leave / failure of employee to participate in accommodation process: Vail v. Oromocto (Town), 2022 CanLII 129486
By Chad Sullivan and Kathleen Starke Background A recent decision, Vail v. Oromocto (Town), 2022 CanLII 129486, involved several grievances including an unjust dismissal claim by a firefighter as well as a grievance filed by…Read More
By Stuart Wallace and Kim Walsh On January 1, 2022, the Underused Housing Tax Act (the Act) took effect. The Underused Housing Tax (the UHT) is an annual 1% tax on the value of vacant or…Read More
Parlez-Vous Francais? Recent amendments to Quebec’s Charter of the French Language may impact Atlantic Canadian businesses
By: David F. Slipp and Levi Parsche In May 2022, Bill 96 was adopted by Quebec’s National Assembly, significantly amending the Charter of the French Language (the “Charter“). The amendments create new requirements for using…Read More
The Winds of Change (Part 7): Paying the Piper: New Newfoundland and Labrador Fiscal Framework expects billions in revenues from wind to hydrogen projects
By Dave Randell, G. John Samms, and Stuart Wallace With the deadline for bids on crown lands available for wind energy projects extended to noon on March 23rd, the latest development in our Winds of…Read More
By Kevin Landry and Colton Smith The Retail Payment Activities Regulations have been released in the Canada Gazette Part 1 for comment. Interested persons may make representations concerning the proposed regulations for a period of 45…Read More
By Andrew Burke, Colleen Keyes, Gavin Stuttard and David Slipp With proxy season once again approaching, many public companies are in the midst of preparing their annual disclosure documents and shareholder materials for their annual…Read More
By Brittany Trafford and Sean Corscadden In response to the nationwide labour shortage, the Federal government is allowing select family members of foreign workers to apply for open work permits. This temporary policy came into…Read More
Mark Tector and Ben Currie Effective January 1, 2023, amendments to Ontario’s Employment Standards Act, 2000 (“ESA”) took effect, excluding “business consultants” and “information technology consultants” from the application of the ESA. This is a…Read More
By Perlene Morrison, K.C. and Curtis Doyle Once again, the time has come to review the year that was and to chart the course for the year ahead. For municipalities and planning professionals in Prince…Read More