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.
Application form
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.
Archive
Nancy Rubin & Tiegan Scott On July 21, 2022, the Federal government announced a new investment of up to $255 million for clean energy initiatives in Nova Scotia. The funds will be allocated in two…
Read MoreBy: John Samms, Sadira Jan, Paul Kiley, Dave Randell, Alanna Waberski, and Jayna Green Now that the Government of Newfoundland and Labrador (“GNL”) has amended the Order in Council that had banned Crown titles and…
Read MoreBy Paul Smith, Dave Randell and Graham Haynes On June 9, 2022, the Government of New Brunswick (“GNB”) released a consultation paper entitled Proposal to Modernize the Business Corporations Act (the “Proposal”) which outlines several significant…
Read MoreIncluded in Discovery: Atlantic Education & the Law – Issue 10 Koren Thomson & Josh Merrigan Introduction In the wake of the Supreme Court of Canada’s decision in Alberta (Information and Privacy Commissioner) v…
Read MoreWe are pleased to present the ninth installment of Beyond the Border, a publication for employers aiming to provide the latest information and analysis on new immigration programs and immigration-related issues. In this issue, insight…
Read MoreKathleen Nash The Supreme Court of Canada’s recent decision in Law Society of Saskatchewan v Abrametz clarifies the standard of review applicable to questions of procedural fairness and abuse of process, as it relates to…
Read MoreIncluded in Discovery: Atlantic Education & the Law – Issue 10 Mark Heighton & Chad Sullivan Overview In Marcus Bornfreund v. Mount Allison University, 2022 NBQB 50 the New Brunswick Court of Queen’s Bench…
Read MoreIncluded in Discovery: Atlantic Education & the Law – Issue 10 Richard Jordan & Jennifer Taylor As the COVID-19 pandemic surges on, so does the flow of misinformation online. Academia has not been immune,…
Read MoreJohn Samms and Matthew Craig Further to our original article published on May 17, 2022 (included below), on the changing energy policy frameworks in Newfoundland and Labrador, the government amended the Order in Council (“OC”)…
Read MoreBy Nancy Rubin & Colton Smith Wind turbine regulations in the Municipality of Cumberland are set to change. On June 22, 2022, Cumberland Council approved a second reading of amendments relating to their…
Read More