 On September 30, 2015, pension law was modernized in British Columbia. To harmonize BC with other jurisdictions in Canada, the province introduced financial hardship unlocking for pension funds, held in either a locked-in retirement account, known as LERAS, or a life income fund, known as LIFS. If you meet the requirements, hardship unlocking is now permitted under the new Pension Benefits Standards Act, PBSA. This video is designed to educate owners of LERAS or LIFS about the unlocking process. It is important to understand that you can only make one application annually under each of the five grounds described in this video. Let's get started. First, download the general application form called Application to Unlock British Columbia Funds due to financial hardship from the Financial Institutions Commission of BC's website. As the owner of the LERA or the LIFS, you must sign your application not more than 90 days before you make an application to the Financial Institution holding your locked-in vehicle. If you are married, your spouse must sign the waiver form in the presence of a witness, but outside your presence not more than 90 days before the date of the withdrawal of the funds. A copy of the spousal waiver form, Form 1, is also available on the Financial Institution Commission's website. Your withdrawal will be subject to taxes and may be subject to processing fees by your financial institution. If you are unsure about whether your financial institution is charging processing fees to unlock your pension, please talk to them directly before you attempt to unlock your funds. Understanding the application of early withdrawal taxes is very important. For example, if you want to withdraw $5,000 and the tax rate is 10% and no processing fees are charged by your financial institution, the total amount withdrawn will be $5,555.56. $555.56 will go to the Canada Revenue Agency, the CRA. You will receive $5,000, but your locked-in vehicle will be depleted by $5,555.56. Be aware also that the marginal rate of tax will increase. The larger the amount you expect to withdraw, the larger the amount of taxes you may have to pay, so be sure you understand the total amount of taxes that will be paid to the CRA as part of the unlocking process. In order to properly assess the impact of these charges, we advise getting either independent financial advice or consulting with your financial institution so that you withdraw the appropriate amount to meet your financial needs. Although your immediate financial needs may be your first priority, the withdrawal of funds for reasons of financial hardship may significantly affect your financial security and comfort in retirement. Under the new PBSA, there are now five grounds under which you can apply to unlock your locked-in funds. We will provide examples of how each of these work later, but for now, let's list them. Low income. You may unlock your lira or your lift if your expected income falls below a set amount. For closure. To avoid the foreclosure of your or your spouse's principal residence, you may be able to unlock to pay the amount of the mortgage in arrears and the associated legal fees. Eviction for rent in arrears. To avoid being evicted because of unpaid rent on your or your spouse's principal residence, you may be able to unlock the amount of the rent owing. First month's rent and security deposit. Your lira or lift may be unlocked in order to secure a new home for you or your spouse. You may be able to unlock the amount of your first month's rent and the security deposit or a pet damage deposit. Medical costs and renovations. The cost of medical expenses for you, your spouse, or dependents may be unlocked from your lira or lift if these expenses are not being covered by a medical plan or by another source. If a doctor approves, you may also be eligible to unlock funds to pay for renovations to your main home to help you or your spouse, or a dependent, better cope with an illness or disability. Let's talk more about the first grounds under which you can unlock. Low income. What is a low income? In order to make an application for a withdrawal under the low income exemption, your total income from all sources cannot exceed 66 and 2 thirds of the year's maximum pensionable earnings known as YMPE. The YMPE is the earnings on which contributions are made to the Canada Pension Plan. The YMPE for 2015 is $53,600, which means that you may be eligible to unlock your funds if you expect to earn less than $35,733 in the next 12 months or 66 and 2 thirds of the YMPE. The YMPE is adjusted each year, so the low income amount will also change each year. To verify the YMPE amount for the current year, please visit the Financial Institution's Commissions website. By law, the maximum low income amount that can be withdrawn is capped at $26,800. This is 50% of the YMPE. This amount is fixed under the Pension Benefits Standards Act and Regulation and cannot be exceeded. In order to withdraw your pension funds as part of your application, you will need to calculate your total expected income before taxes for the 12 months following the date on which your application is signed. So, how do you calculate this amount? To calculate the amount, include all of the income you expect to earn in the next 12 months from all sources, including employment earnings if applicable, employment insurance payments, life income fund payments, spousal support and payments received from any other source. If you are receiving payments and are unsure about whether or not they should be included as income, please contact the Canada Revenue Agency. If you do not expect to earn any income in the next 12 months, then put zero in the expected income line. Having calculated your expected income before taxes, multiply this number by 0.75, then subtract $26,800 from this number or 50% of the YMPE. The resulting amount is the amount that you can withdraw from your locked-in pension vehicle. In order to unlock your funds locked in a lira or a lift due to foreclosure, you must provide supporting evidence to the financial institution holding your lift or lira. You are required to demonstrate that you or your spouse is facing a foreclosure on your principal residence. You cannot unlock your funds for any other residence you occupy. It must be a principal residence and you must be facing a foreclosure on the residence if the default is not rectified. It is important to note that this exception applies only to your or your spouse's principal residence. It does not apply to any recreational or rental property that you or your spouse may own. To qualify, you will need to provide a copy of the notice of foreclosure for the mortgage and arrears and the documents showing the amount of the mortgage in arrears owing to the financial institution or lending agency holding your or your spouse's mortgage. You may apply for the release of funds from your locked-in lira or lift if you or your spouse is facing the threat of eviction from your principal residence because rent is in arrears. This opportunity only applies to your principal residence. In order to qualify to unlock your funds, you must bring supporting evidence of your situation to the financial institution holding your lira or lift. You will need to bring a copy of the notice of eviction for your or your spouse's rent in arrears and documents showing the amount of rental arrears owing by you or your spouse. You may also apply to unlock funds to secure a new principal residence for you or your spouse. In this case, you may apply the funds to pay for the first month's rent, security deposit, or pet damage deposit required to be paid to secure your principal residence or the principal residence of your spouse. To unlock the funds, you will need to provide proof by showing a copy of the relevant lease rental agreement and supporting documents showing the deposit required to secure a new residence such as documents showing your first month's rent, security deposit, or pet damage deposit. In order to help you or your spouse or a dependent better cope with an illness or disability, you can apply to unlock pension funds to cover medical costs under the new PBSA. Medical costs include renovations to your home, dental and orthodontic costs. You can claim these costs for yourself, your spouse, or a dependent. In order to qualify, you must demonstrate that you, your spouse, or your dependent's costs or potential costs cannot be paid by any other means and are not being reimbursed by any other source. These medical expenses are those that have been incurred or will be incurred in the one year period following the date on which the application for withdrawal is signed. In order to apply for the coverage of medical costs, you will need to take the following documents to your financial institution holding your funds. A medical certificate from your medical practitioner affirming that medical treatment is required to treat your illness, your spouse's illness, or your dependent's illness or disability. You can claim expenses that have been incurred or will be incurred. Also provide a copy of the receipts for or an estimate of the expenses that you or they have or will incur. We hope that you have found this video helpful. If you do not qualify to unlock your lira or your lift for reasons of financial hardship, you may qualify under the four exceptions that have been carried over from the previous legislation. Small locked-in pension amounts, age 65 and total pension entitlement, non-residency in Canada for tax purposes, and shortened life expectancy. Please see the corresponding video on FICOM's website for more information on these unlocking exceptions. Thank you for watching.