Unlocking Locked in Pension's ( LIF, LIRF, LIRA )

[Bill C]

Hi Geoffery;

I was going to reply to some of your comments about Seniors being a drain on the system etc.

I then realized that you dont really know any true stats of what Seniors of past generations contributed to your generations well being.

I feel that your comments are not worthy of commenting to.

Bill Costello

[August1991]

I was going to reply to some of your comments about Seniors being a drain on the system etc.

I then realized that you dont really know any true stats of what Seniors of past generations contributed to your generations well being.

I feel that your comments are not worthy of commenting to.

So, because Mozart left us some great music and Newton discovered calculus, you want young people today to give you some money.

What did you leave seniors of generations prior to yours?

And speaking of what past generations have left to future generations, I cannot ignore the serious environmental problems your generation is leaving to the future.

Then again Bill, what does all this have to do with locked-in pensions? And given your attitude to comments, I wonder why I'm even commenting here. Heck Bill, why not make yourself of Dictator of the World and then we can just ignore this whole commenting business entirely. (It seems that people of your generation tried that solution often. Did it work?)

[capricorn]

If there's one thing we Canadians are good at, it's playing the blame game.

[Bill C]

August1991

Quote [ Then again Bill, what does all this have to do with locked-in pensions? ]

It has nothing to do with locked in pensions. geoffrey is the one that brought it up.

I wasn't going to respond because he doesn't have any true facts to back up what he says about seniors being a drain . He also doesn't have any real concerns when he is talking about pensions .

The pensions have already been unlocked 50% in his province.

As far as the statement of me being a dictator. It wont make much of a difference to me if these pensions are unlocked or not.

I am just tired of the government scamming the people of Canada YOUNG and OLD with their pension scheme.

WAKE UP!!!!

At least the younger generation coming up will hopefully gain a little bit from these postings and not be led into the trap of locked in pensions but instead advise their employers that they want to have there pensions in a unlocked RRSP.

The older generation did not have the advice from financle planers and from people like myself and others that these pensions do not become unlocked at retirement as they were led to believe.

Please get this strait this is Your money that you have contributed to your account for retirement.

THIS IS NOT OAS or CPP or any other government money,

geoffrey said Quote [i shouldn't be funding other people's retirements while trying to put myself through school and get established. ] Quote

Does he think he is paying the full price for his education. I dont think so . The tax payers are paying way more for his education then he is. WAKE UP!!!

I dont mind my tax dollars going in to help students the unemployed or any other thing that will help people in need and hopefully the students etc that my tax dollars are helping will graduate and not be educated bums that i have seen so many of. Ones that are so educated and stay in school half their lives and then when they come out into the real world they dont have a clue.

I hope they come out and get a good job and contribute to society as my generation has , and who knows hopefully do a better job.

This is the way Canada is . You help one and other and if you dont like the system move to a non democratic country.

Here is a article on seniors with facts , and I could produce a lot more but I am much too busy trying to get the government of Ontario to quit scamming it's citizens.

Do You have any actual facts that seniors are a drain on the economy. I dont think so!!!

http://www.50plus.com/display.cfm?document...4&cabinetID=329

Bill Costello

Also if you want to continue spouting BS why dont you put your real name to your posts so people can judge you.

This is the way Canada is . You help one and other and if you dont like the system move to a non democratic country.

[geoffrey]

Does he think he is paying the full price for his education. I dont think so . The tax payers are paying way more for his education then he is. WAKE UP!!!

Ya. I pay considerably more taxes than the average Canadian. Believe me, I've got my own drain on the system nicely covered.

The difference between me and you is that my education will provide economic value to the country for likely another 30-40 years. The OAS payments and the like aren't going to provide any economic value ever.

--

The government spent 196 billion in 2004... of which 28 billion was OAS. More than 14% of our taxes are directly funnelled to seniors in cash. It is by far the greatest single burden on the Canadian taxpayer. Guess how much the government gives in scholarships. 600 million. I think we have a bit of a case of mixed priorities.

Sources:

http://www40.statcan.ca/l01/cst01/govt02b.htm

http://www40.statcan.ca/l01/cst01/govt05a.htm

--

Personally I think it's a huge case of age discrimination to give someone a load of tax breaks and cash when they turn 65. People can theoretically work until they die, many do. Why should I pay someone to be unproductive? If you want to retire, do it on your own dime. If I wanted to just relax for a few years, you'd probably expect me to do it on my own dime too.

The rest of your arguments are just silly emotional drivel. I especially enjoyed this one:

This is the way Canada is . You help one and other and if you dont like the system move to a non democratic country.

The way Canada should be is that your responsible for your own retirement. If you don't like the idea of free market economics, I suggest you move to a non-democratic country.

[Bill C]

Quote[ The way Canada should be is that your responsible for your own retirement.]

That is what we are trying to do but the government would much rather that we collect GIS etc.

As I said Wake up . This our own money and if we are able to take it out we will have to pay tax on it plus we will never be eligible for GIS. Isn't this what you want. I dont get where you are coming from.

I guess you just like complaining about something that you obviously no nothing about.

[geoffrey]

It is your money, but it's been able to grow tax free in exchange for security that your not going to waste it.

You always had the option to invest in more liquid investments... of course with less favourable tax treatment and sometimes higher risk.

You also knew going into retirement your financial situation and how much you'd be getting over time.

Above that, like I said before, if you have all these financial assets tied up, it shouldn't be hard for any institution to loan you what you need... and it will be a much more favourable financial transaction for yourself.

[August1991]

It is your money, but it's been able to grow tax free in exchange for security that your not going to waste it.

You're wrong here, Geoffrey. And I suggest you go above in this thread to the Andrew Coyne quote that I provided.

Tax-sheltered savings level the playing field. A tax on all income creates an unnatural incentive to consume now rather than save and consume in the future. Savings (eg. RRSPs) should be exempt from tax (and RRSP limits should be abolished).

Bill C has a separate question. Should the government force people to save when they don't want to?

RRSPs merely level the playing field and make the choice between consumption today and consumption next year more honest. The CPP forces people to "save". In Bill C's mind, he has savings that he wants to spend now and the government is stopping him.

I frankly think Bill C is naive about this issue but that's his perception. What Bill C fails to realize is that these are not his savings because the government has the power to define what is his. That, Geoffrey, is kind of your point because as you state, you work and pay taxes. You don't have everything that is yours.

IOW, a locked in RRSP amounts to a "tax" and Bill C thinks this tax is unfair. Bill C, join the queue.

[Bill C]

August1991

Quote[ Bill C thinks this tax is unfair ]

That tax being unfair is true. But that isn't the real point that I am talking about.

In the 60's and 70's most employer - employee pension plans were defined contribution & defined benefit plans.

At that time there was no such thing as a unlocked pension plan. Then in the early 80's then came the RRSP which was still a registered retirement plan but not locked in.

Our company was in a defined contribution plan at that time.

When RRSP's became available our financle planer came to our place of work to advise us of the new plan.

At that time I suggested that we stop contributing to our defined contribution and go into the RRSP plan.

The financial planer then answered . " You dont have to. If you quit before your normal retirement you can transfer your money into a RRSP. "

The thing he dident mention was that it would be a locked in RRSP. Not a regular RRSP.

We did not find about his screw up until approximately 15 years latter when a fellow worker retired early.

The worker then had to return to work as he was only allowed to take out 6% of his investment a year.

In this period many of us put extra money into this plan thinking it would be unlocked at retirement.

When we found out about our plan being locked in at retirement we then quit that plan and started up a regular RRSP plan . Still contributed by the company and employees the same.

I have found out since that many people were giving the same misinformation as our group. Financial planers apparently were not very well trained about these pensions.

(( it is still happening to day as I received a letter from a single woman that was going to retire at 55 and then learned that she would only be able to draw 6%. She then contacted here financial planer and he said that he thought it came unlocked when a person retired. ))) It Dosen't

This planer has portfolios for many Stelco employees. How scary is that?

Another thing that makes me keep going on this is the fact. The Ontario MPP's realized how bad this locked in set up was in 1999 and voted to change legislation to unlock these pensions fore them selves.

They were advised at that time by the Federal government that they could not transfer into a RRSP or there would be penalties.

They ignored this warning and there were penalties amounting to $ 10 million.

The tax payers ended up paying for that.

If our plans are unlocked they will be transferred into a RRIF where there is a minimum amount that you have to take out but no maximum.

As I have said before if these pensions are unlocked it wont make a big difference to me but it could help a lot of people in many different circumstances.

geoffrey ; You also seem to think if a person gets their pension unlocked they will be paying less tax.

That hype about if you shelter your money that you will be able to take it out later and pay less tax.

As far as I am concerned that is bull. I am paying more tax now then I ever did.

Also if a person saves for early retirement and is able to retire he is leaving room for a person with a young family to get a job.

I know in your area Jobs are plentiful but that is not so in my area.

Another thing if pensions are unlocked and a person takes there money out to keep up their standard of living . They wont qualify for GIS . One of the things you are against.

If a person takes all of their money out fast , Then they will be hit with the maximum tax.

I dont think they are going to drain their funds and become wards of the state . That wouldn't be very smart.

If a person has a small amount in a fund under $17,000.00 they can take it all out right now if you want.

If a person has over $ 29,000.00 and they have financle hardship .They cant take any out. This dosent make sense.

If the plan holder passes away the plan becomes fully unlocked for the spouse.

Why not for both of them when they are alive. Again dosent make sense

Bill Costello

[geoffrey]

geoffrey ; You also seem to think if a person gets their pension unlocked they will be paying less tax.

That hype about if you shelter your money that you will be able to take it out later and pay less tax.

As far as I am concerned that is bull. I am paying more tax now then I ever did.

You shouldn't be, really, unless your income is higher now than when you were employed. You may need a better tax guy if your paying more.

Also if a person saves for early retirement and is able to retire he is leaving room for a person with a young family to get a job.

I know in your area Jobs are plentiful but that is not so in my area.

Fair. I'll say that's a grand market solution to problems. Right on.

I dont think they are going to drain their funds and become wards of the state . That wouldn't be very smart.

People do irrational things quite often, just look around this great country of ours.

If a person has a small amount in a fund under $17,000.00 they can take it all out right now if you want.

If a person has over $ 29,000.00 and they have financle hardship .They cant take any out. This dosent make sense.

I see your point. Take out a loan. It's the better financial decision.*

If the plan holder passes away the plan becomes fully unlocked for the spouse.

Why not for both of them when they are alive. Again dosent make sense

Interesting point. I didn't know this, I'll have to look into this further. Perhaps to cover last expenses or debt... things like that. When someone dies, their individual debt is rarely transferable over the long term... financial institutions want their money pretty quick when the estate divies out the moola. I do have to look into this more though before I can have an opinion on the matter.

*This advice is not to be taken as a professional opinion, individual circumstances may differ, please check with your financial advisor or pay me a fee to examine your individual situation. Got to cover my ass.

[August1991]

The thing he dident mention was that it would be a locked in RRSP. Not a regular RRSP.

Do you have evidence of his misinformation?

If the plan holder passes away the plan becomes fully unlocked for the spouse.

Why not for both of them when they are alive. Again dosent make sense

Interesting point. I didn't know this, I'll have to look into this further.

That struck me as strange too. If you divorce your spouse, could you liberate the money?

[Bill C]

August1991

Quote [Do you have evidence of his misinformation?]

The only evidence is what was said a numbers of years ago at a meeting at our place of work.

When we found out I tried to convince the employers to sue the finance company.

They dident want to as the planer was the brother in law of the major share holder.

Quote [That struck me as strange too. If you divorce your spouse, could you liberate the money?]

That is the way the law is in Ontario . If the holder passes away the plan is fully unlocked for the spouse.

If you divorce the plan is divided and held locked in and neither one can unlock it.

As I have said before the locked in pension plans are a mess. The best way to straighten this all out is to follow the lead and adopt the Saskatchewan plan for all the provinces and the federal government.

Locked in pensions are delt with in different ways all across Canada,

geoffrey

Quote [i see your point. Take out a loan. It's the better financial decision.*]

Yes it is a better financial decision.

My self I do not need a loan.

There is one problem if you think that you can use the money in a locked in fund for collateral though.

No Bank or financial institution will give you a loan based what you have in a locked in fund.

You could have $500,000.00 in a locked in fund and if you defaulted on your loan they could not touch it.

I am going to use the example below to try and explain what I am talking about.

I have heard many different scenarios of people with financle hard ship.

If you look back to the one of Tom Law. That one disturbs me the most.

This kind of makes it hard say for a person that owns a cottage and needs say $75,000.00 to save his cottage.

their income is over $ 29,000.00 so they can not apply for financial hard ship. (((( If their income was under $ 29,000.00 they could apply but they would have to dispose of certain assets first and add that to their income. The cottage would be one of them.)))

These people say have $ 500,000.00 in locked in funds. This does not help qualify for a loan.

They would be able to take the $ 75,000.00 out of their fund if it wasnt locked in and pay the tax on it .

They would still have sufficient money to keep them comfortable for their remaining years.

I know there are ways that you can get money. Mortgage your home etc.

All I am saying is there are many circumstances that people may want to take money out of their fund.

As I have said before many people were misinformed about these locked in planes and after all it is their money and should be treated like any ordinary RRSP.

Given how people will be switching jobs in this time and age . I believe that in the near future all a person will see is RRSP's and no more defined benefit planes or defined contribution planes.

Why not straighten it all out now.

Bill Costello PS I also am not a financial planer.

[geoffrey]

I feel so sorry for the people with their cottages that need $75k to fix it up. If they've got that cash to throw around, they could have afforded a better financial planner.

[Bill C]

I feel so sorry for the people with their cottages that need $75k to fix it up. If they've got that cash to throw around, they could have afforded a better financial planner.

Hi Geoffery.

That was just fiction. I just wanted to show how the system is.

I do hope however that you do feel sorry for people like the James Law Family

James Law

Why is this government so cruel. They act like dictators. My mother was diagnosed with terminal cancer 5 years ago. Myfather and my mother wanted to go and travel as long as they could together and my father had a sizeable amount of money in a locked in pension and was already 68 years old The government would not allow him to take the money out . My mother then passed away two years later and had not been able to enjoy some of the things that they had saved the money for because of a unfeeling government. Now my father has passed away in the past year He also had no enjoyment from their savings . We his children did not want their money . We wanted them to be able to enjoy themselves. I am sure that thought never entered the governments mind . They would gladely take any money from my parents when they passed on. PlEASE people get rid of this uncaring government that is in power. The ones that have just unlocked the pensions a measly 23\% instead of letting the seniors have their money so they can live their retirement in the fashion they want Please vote for whichever government will unlock these pensions for your mother and fathers.

[Higgly]

I feel so sorry for the people with their cottages that need $75k to fix it up. If they've got that cash to throw around, they could have afforded a better financial planner.

Is this the extent of your understanding of the problem?

These people do not have the training, nor the experience, to understand all the implications of their policies. Look at the Canada Ponzi Plan.

[geoffrey]

Hi Geoffery.

That was just fiction. I just wanted to show how the system is.

I do hope however that you do feel sorry for people like the James Law Family

James Law

Why is this government so cruel. They act like dictators. My mother was diagnosed with terminal cancer 5 years ago. Myfather and my mother wanted to go and travel as long as they could together and my father had a sizeable amount of money in a locked in pension and was already 68 years old The government would not allow him to take the money out . My mother then passed away two years later and had not been able to enjoy some of the things that they had saved the money for because of a unfeeling government. Now my father has passed away in the past year He also had no enjoyment from their savings . We his children did not want their money . We wanted them to be able to enjoy themselves. I am sure that thought never entered the governments mind . They would gladely take any money from my parents when they passed on. PlEASE people get rid of this uncaring government that is in power. The ones that have just unlocked the pensions a measly 23\% instead of letting the seniors have their money so they can live their retirement in the fashion they want Please vote for whichever government will unlock these pensions for your mother and fathers.

That is a very sad situation, but it's definitely the exception, not the rule. That would be an ideal situation where borrowing the money and paying it back as the plan pays out would not only solve the problem, but normally be financially benefical to the party involved.

Seniors aren't stupid. They need to take an active role in determining their financial options. Options existed there.

These people do not have the training, nor the experience, to understand all the implications of their policies. Look at the Canada Ponzi Plan.

CPP, while I don't agree with its coercive nature, at least pays out only what you put in (kind of anyways).

I would personally like to see a move away from locked in pensions and towards more innovative tax regimes that encourage active private investment in the economy. Unfortunately, as long as we use our old, outdated tax system and are forced into these situations, we'll need the locked in pension.

Asking the government to unlock all the pensions now is unreasonable. People are missing the trade off hear. The government likes the stability, you like the tax breaks. Now you want the tax breaks (the ones you've enjoyed for many years) without giving the government what it wants.

It's a little late to change the rules.

If I was to advocate something so strongly, I'd switch to informing those approaching retirement on alternative investment models and how to protect themselves from a financial catastrophe.

[Bill C]

http://www.thestar.com/article/225446

Jun 14, 2007 12:52 PM

RITA TRICHUR

BUSINESS REPORTER

Two out of three Canadians expecting to retire in 2030 are failing to save enough money to cover basic household expenses in their golden years, says a new study released today by the Canadian Institute of Actuaries.

The report, “Planning For Retirement: Are Canadians Saving Enough?,” warns the greying baby boomer generation to either scramble to sharply increase their annual savings or plan to work past age 65 to avoid financial hardship.

"The message for most Canadians in their early to mid-40s is they will need to save more if they expect to enjoy an independent retirement," said the Institute's president, Normand Gendron.

"Governments need to provide Canadians with more education about the role that different savings vehicles can play in generating retirement income, and provide tools and incentives that encourage more households to save."

Canada’s public pension system is not intended to provide all the income needed for an independent retirement, the study said, noting it is only geared to replace about 40 per cent of gross income for households earning the average industrial wage, which was about $40,000 in 2005.

Canadians must act fast to build on this income through some combination of workplace pension plans, registered retirement savings plans, home equity and personal savings, it added.

In fact, actuaries determined a 40-year-old single person earning about $40,000 would need to save as much as 20 per cent, or $8,000, of his or her gross income every year for the next 25 years to cover necessary expenses in retirement. The study found that only a third of Canadian households are currently on track.

The study's findings stand in sharp contrast to a recent opinion poll by Pollara Inc. that found 55 per cent of Canadians aged 40 or older feel some level of confidence that they will have the financial resources to retire comfortably.

Those with retirement savings feel more confident, as do those with a workplace pension plan. Three out of four people surveyed said they plan to retire at or before age 65

[Bill C]

Our Reply to The Star

Dear Rita Trichur,

My name is Grant Fleury.

I am with the Ontario Coalition of Independent LIF Holders, a

non-partisan group representing the interests of the estimated hundreds

of thousands of LIF Holders in Ontario. Our goal is to inform these

individuals of the current rules and regulations pertaining to their

locked-in funds and to thus lobby the government and political parties

to amend the current Ontario Pension legislation to allow 100% access

to locked-in pension funds at the earlier of either the normal

retirement date or age 55 and beyond as has been done in Saskatchewan

and to lesser and differing extents in other provinces in Canada.

I read your article with great interest as it certainly brings to light

the alarming reality of the incorrect perception of many

Canadians(Ontarians) of the belief they will have enough money to

comfortably retire on.

As you have duly noted from the report of the Canadian Institute of

Actuaries that there, in fact, is not enough money being set aside by

two-thirds of Canadians for their retirement years, there remains

another less written about subject that further compounds the dismal

financial reality of these future retirees.

Many of the people that were surveyed, no doubt, are in possession of

one or more forms of a locked-in fund known as either a LIRA, LIF or

LRIF, depending at what stage those monies are at in their transition

towards actual available dollars to the pensioner. Working to or past

65 will be, for most, the only option available in order to achieve

retirement independence if any of these type of locked-in funds are in

their retirement portfolio.

The reason I say this is simply due to the fact that although a

significant amount of people are in possession of these locked-in

accounts known as LIRA's, LIF's or LRIF's, most are unaware of the

highly restrictive rules and regulations they will face when they

expect to begin withdrawing from these accounts to supplement or

primarily fund their retirement years.

The message by institute president Normand Gendron "The message for

most Canadians in their early to mid-forties is they will need to save

more if they expect to enjoy an independent retirement," could and

should be amended to include or address the locked-in type of

retirement savings as a principle reason for having to work longer or

begin to save earlier and that those people who have LIRA's, LIF's or

LRIF's should be aware that they will be limited to a yearly access of

approx. 6.5% for LIF's or the market growth for LRIF's and thus had

better include this extreme limitation in their overall calculations to

toward their ultimate goal of financial independence upon retirement.

This information, or lack thereof, regarding LIRA's, LIF's or LRIF's is

grossly lacking in the general public and quite often is also not fully

understood by financial consultants or institutions' agents. Thus

owners of these type of locked-in accounts, more often than not, think

that when they reach fifty-five (55), they will have full unrestricted

access to their locked-in pension funds. They are shocked and outraged

when informed of these limitations as nothing could be further from

their perception than the archaic limits imposed by the regulators of

locked-in funds in Ontario.

Hence the statement "There is a gap between what Canadians are thinking

and what they are actually planning and saving." is in fact much larger

than the report suggests if some of these pension funds are of the

locked-in variety.

The statement "The problem is that boomers have neglected to save", is

not entirely the fault of the boomer. The real underlying problem is

the lack of disclosure by the large corporations and financial

institutions who have laid these people off over the last thirty or so

years, and failed to accurately inform them of the fallacy that the

settlements they receive in the form of locked-in funds are not as

useful as they are portrayed to be. Yes, they may seem large at the

time, but they are legislated to be doled out, at a non-linear rate,

over a period from 55 to 90 years of age where in fact the majority of

this money will never be fully accessible to the fund owner as less

than 1/2 of 1 percent of us will live to 90 anyway! The remaining

money, upon death, is immediately taxed at the beneficiary's taxation

rate since it is added to their taxable income for the year and heavily

taxed at a much higher rate. This more often than not repeated scenario

essentially results in a "worthless bag of cash" to the pensioner since

they will likely never see the bulk of their own money while alive and

a large and immediate tax grab for the government..

Unless the existing pension legislation is changed in Ontario, and

Canada for that matter, Canada's public pension system will be relied

on even further to supplement the shortfall of future retirees with

locked-in pension funds as a result of their paltry access.

"The government will provide you with a base support system that will

keep you just above the poverty line – but that's all," said Robert

Brown, an actuarial science professor at the University of Waterloo,

who worked on the study.

This is precisely one of the principle reasons why we, the Ontario

Coalition of Independent LIF Holders, are advocating the abolition of

the restrictions regarding the limits to access of these locked-in

funds and thus allow the owners full 100% access to their funds upon

reaching the qualified age. In conjunction with CARP, and a number of

other well known and highly regarded and respected individuals in the

field of economics, we are currently and vigourously pursuing the

political parties, including the current Liberal party, to remove these

restrictive limits and provide full access as was done for all

residents in Saskatchewan a few years ago and was also done exclusively

for 61 MPP's in Ontario in 1999 via a special discriminatory amendment

for sitting members of the legislature contained in Bill 27(1999). We,

the remaining Ontarians, are insisting on equal and fair treatment as

was afforded the 61 MPP's in 1999 when they exclusively legislated

themselves a 100% unlocking privilege when their pension plans were

also previously wound up and they too were subsequently left with

similar locked-in pension plans.

All of the findings that you have pointed out in your article are in

fact worse than they appear to be on the surface if some of the pension

ear-marked money is of the locked-in variety.

As I've stated earlier, most people surveyed by our group, are unaware

of the restrictions to access they will face when they begin to

withdraw and are shocked when they are referred to the FSCO and the PBA

in Ontario to determine these extremely low percentages for withdrawal

rates and restrictions that they are being limited to.

The statement, "According to Statistics Canada, about 9.4 million

households had some form of pension assets in 2005." again is important

to note that depending on which type of pension fund or account that an

individual owns will largely change the number of years each person

will have to either start to save earlier or work later to in order to

achieve that comfortable level of retirement that most of us are saving

for.

Defined contribution type pension plans are a way for companies to not

only slash costs but to put the onus on the individual to manage their

own retirement with the companies defined monthly contribution to their

employees pension regardless of the strength or performance of that

employee's respective company.

In addition to the statement, "The study also recommended that Ottawa

consider making interest paid on residential mortgages tax deductible,

as it is in the U.S., given the high percentage of Canadians who may

need some portion of their home's equity to provide adequate retirement

income.", there should also be a recommendation to eliminate the locks

on all locked-in pensions upon the qualified retirement date and thus

provide the entire population a greater access to their own retirement

money thereby allowing them the flexibility to greater managerial

control over their entire pension strategy and subsequent level of

financial independence.

Sincerely,

Grant Fleury,

Ontario Coalition of Independent LIF Holders

[Bill C]

Hi All; This may be interesting to many of you.

Bill Costello The Ontario Coalition of Independent LIF Holders.

For Immediate Release

July 5, 2007

TORY SAYS ONTARIO SENIORS DESERVE PENSION FAIRNESS

PC plan will increase fairness, give seniors full access to locked-in pensions

(London, ON) – Progressive Conservative Party Leader John Tory today said a PC Government will unlock pensions for seniors and retirees so they can access and manage their own money as they see fit.

“Ontario’s seniors and retirees built the foundation for the strong Ontario we know today. They deserve to have control over their hard-earned retirement savings,” said Tory. “I’ve heard from seniors and retirees across the province that the rules are too restrictive. We believe that Ontarians know best how to look after their money– not government.”

Tory met with and listened to the concerns of local seniors today in Southwestern Ontario. As part of the PC ‘Leadership Matters’ plan to provide fairness to Ontarians, Tory said a PC Government will give Ontarians 100 per cent access to their locked-in pension income. This would mean seniors and retirees would have access to 50 per cent of their pension at age 55 and the remaining 50 per cent at age 65. In Dalton McGuinty’s Ontario, pensions are locked-in by the government as late as age 90 and the most any senior can hope to access from their pension savings is one out of every four dollars.

“Our plan will allow Ontario seniors and retirees to have control over their own money and better plan for retirement based on their own needs,” said Tory. “Ontario’s pension regulations present unnecessary challenges for seniors and retirees looking to transform a lifetime of hard work into financial freedom.”

Tory added, “This is a simple change to Ontario’s pension rules with no cost to the taxpayer. Unlike Dalton McGuinty, who is only willing to provide seniors and retirees with partial access to their locked in pension funds, a John Tory PC Government will respect the wishes of these individuals to manage their money as they see fit.”

In the 2007 Budget, Dalton McGuinty responded to seniors and retirees concerns about this issue by proposing a plan that would give Ontarians access to 25 per cent of locked-in accounts at the earliest retirement date of the pension plan from which the money was transferred and 100 per cent access at age 90. To date, no regulations or legislation have been brought forward to enact these proposed changes.

During his remarks, Tory cited comments made in March 2007 by Dr. Jack Mintz of the University of Toronto calling for Ontario to unlock the chains put on pension savings of employees who change jobs or retire. According to Mintz, unlocking locked-in pensions would help contribute to labour mobility, better retirement plans and ultimately, a stronger economy.

“Leadership is about listening to seniors and retirees. If we are going to remove the barriers and give Ontarians the fairness and peace of mind they deserve, then leadership matters,” said Tory.

For more information:

Michelle Pennell

(416) 325-9109

[Bill C]

Backgrounder - Fairness for You and Your Family - Unlocking Locked-in Pensions

Fairness is a basic value for Ontarians - one that has many dimensions.

Fairness means an Ontario that rewards hard work, entrepreneurship and innovation, respecting taxpayers and giving everyone a chance to participate in the province’s prosperity.

Fairness also means giving Ontarians control over their hard-earned retirement savings.

John Tory believes individuals know how to manage their own money better than the government.

That’s why a John Tory PC Government will give Ontario’s retirees 100 per cent access to their locked-in pension income - 50 per cent at age 55 and the remaining 50 per cent at age 65 - which under current rules are locked-in by the government until age 90.

What is a Locked-in Pension?

· When individuals leave a company that provides a defined benefit or defined contribution pension plan, they may have the option of leaving their portion of the pension in the company plan or rolling it into a Locked-In Retirement Account (LIRA).

· At age 55 or the normal retirement date of the commuted pension plan (whichever is earlier) individuals may transfer their LIRA into a Life Income Fund (LIF) or Locked-in Retirement Income Fund (LRIF).

· LIRAs, LIFs and LRIFs are regulated independently by each province and territory and the federal government for federally regulated industries.

Locking-in Rules in Ontario

· Locking-in rules prevent individuals from increasing their retirement income in any one year beyond the annual withdrawal limits for LIFs and LRIFs. LIRAs do not allow any withdrawals.

· LIF/LIRA/LRIF-holders cannot access additional principal in their locked-in accounts unless they can demonstrate to the Government that they are in dire financial or health circumstances.

· By age 71, LIRAs must be transferred into a LIF or LRIF, or used to purchase a life annuity.

· By age 80, LIFs must be transferred into an LRIF or used to purchase a life annuity.

· At age 90, individuals are finally able to withdraw the remaining principal in their LRIF.

The Liberal Response

· Dalton McGuinty inadequately responded to Ontarians’ concerns in the 2007 Budget by proposing access to 25 per cent of locked-in accounts at the earliest retirement date of the pension plan from which the money was transferred and 100 per cent access at age 90.

· These changes have not yet been made to the appropriate regulations or legislation.

Unlocking in Other Jurisdictions

· Alberta (50% at age 50), Saskatchewan (100% at age 55), Manitoba (50% at age 55) and New Brunswick (25% at any age) have already changed their laws to enable older adults to access some, or all, of their locked-in pension.

[Bill C]

Press Release from CARP & The Ontario Coalition of Independent LIF Holders

Good News for Ontarians:

Enlightened policy promises to unlock Life Income Funds 100%.

Toronto, July 5, 2007 – CARP and the Ontario Coalition of Independent LIF-Holders applaud PC leader John Tory’s announcement today that, if elected, a PC government will allow Ontarians to unlock 100% of their Life Income Funds (LIFs) – half at age 55 and the full amount at age 65. We fully support this progressive policy that will bring Ontario into the 21st century. The PC Party heard us and its decision represents another milestone in our alliance’s campaign to have LIFs unlocked 100% in Ontario. Mr. Tory’s pledge propels the momentum to unshackle LIF-holders begun with NDP MPP Andrea Horwath‘s Bill to unlock LIFs 100% which was introduced in the Ontario Legislature in December 2006, in conjunction with CARP and the Ontario Coalition of Independent LIF-Holders.

When individuals retire/leave a job which has a registered corporate or occupational pension, the terms of the pension plan may allow them to transfer their portion of the pension into a Locked In Retirement Account (LIRA) and subsequently a LIF. However 100% unlimited access to the principal in the LIF is denied to the LIF holders as it is locked-in for life or to age 90.

Like savings in any registered pensions, LIFs or LIRAs are the individual’s money, made up of their contributions plus those of the company or occupation as deferred salary. It is not government money.

A LIF has a mandated maximum yearly withdrawal limit unlike a RRIF which has none. This ensures that the average Ontario male cannot access about two thirds of his LIF until death (average male 79 and female 84) at which moment the LIF is completely unlocked for their spouse. It also means that most of us will not live to 90 at which age all of our LIF can be unlocked.

However, additional access to the retirees’ LIF money in Ontario may be available by submitting a lengthy request form to the Financial Service Commission of Ontario (FSCO). This bureaucratic agency requires a payment of $200 to $600 from successful applicants in order to access their own money. Their appeal may be granted only if the applicant can prove dire health or financial circumstances.

The precedent to unlock LIFs was established in Ontario in 1999 when 61 MPPs were given the right to unlock their occupational pension 100%. Not only did they give themselves a privilege which they denied to all other Ontarians with LIFs but their action cost Ontario taxpayers $10 million because they miscalculated the amount they could put into their individual RRSPs.

- 2 -

For more information on LIFs, the campaign by CARP and its allies to have direct access to 100% of the principal in a LIF without paternalistic government control – go to www.carp.ca.

To sign a petition to the Ontario government on unlocking LIFs 100%, go to http://www.petitiononline.com/WRC101/petition.html

A non-partisan organization, CARP is Canada’s Association for the Fifty-Plus with 250,000 members in Ontario and 400,000 members across the country. Our mandate is to protect the rights and quality of life for older Canadians. Our mission is to provide practical recommendations for the issues we raise.

The goal of the Ontario Coalition of Independent LIF-Holders is to influence the Ontario government to unlock LIFs 100%.

- 30 -

For more information and interviews, please contact:

For CARP, Canada’s Association For the Fifty-Plus:

Bill Gleberzon - Director of Government Relations, 416-363-8748 ext. 230/ 1-800-363-9736 ext. 230 e-mail: [email protected]

For The Ontario Coalition of Independent LIF-Holders:

Bill Nafziger - spokesperson, 519-595-8161 e:mail:[email protected]

Grant Fleury - spokesperson, 705-566-6924e:mail: [email protected]

[August1991]

Bill,

In the unlikely chance that you read one of these posts, I'd like to let you know that I've been thinking about you and your campaign.

I think you are missing a few basic points. The owners of these lock-in RRSPs do not really have all the savings that you purport they have. Rather, they have a life annuity. That is, when they agreed to their pension scheme, they agreed to be paid a fixed monthly sum after retirement as long as they lived.

That's a different proposal than a lump sum of money when someone turns 65.

An actuary could turn the life annuity into a present value lump sum, but the calculation would be based on life tables, or the chance that someone would die. I can understand why an insurer would now be reticent to let an insured - midway through a contract - alter terms.

If a women marries a fat, ugly, old guy for his money, should she be free to abandon him at no cost to herself when she discovers that he's penniless?

[capricorn]

An actuary could turn the life annuity into a present value lump sum, but the calculation would be based on life tables, or the chance that someone would die. I can understand why an insurer would now be reticent to let an insured - midway through a contract - alter terms.

In my case, the terms of my LIF contract are renewable whenever the contract matures. For example, the present contract I signed matures in December 2008. I must then meet with my broker to select the company where I will park the funds. Whoever pays the highest interest will get the business.

[capricorn]

August1991, I forgot to mention that the funds are nevertheless locked in and I cannot withdraw more that 6% per annum of the holding.

[August1991]

In my case, the terms of my LIF contract are renewable whenever the contract matures. For example, the present contract I signed matures in December 2008. I must then meet with my broker to select the company where I will park the funds. Whoever pays the highest interest will get the business.

Good for you, but I suspect that you assume a greater risk for this flexibility. When you have only years to live, and unless you are thinking of your estate, assuming risk is probably not a wise strategy.

I mean, if you want risk, why even have an annuity? Take the cash now and see what happens.

----

Bill's point above is that some people want the cash now, while others want the annuity. As an insurer, I'd be leery of letting my clients now make that choice - unless they had like you assumed the risk. Those who want the cash now are probably people who don't expect to be receiving monthly payments far into the future. IOW, let's be practical about this, they expect to die soon and want a cash-out.