For immediate release
December 10, 2020
Earlier this week, the NL NDP Caucus submitted concerns to the Liberal Government with respect to proposed amendments to the Pension Act that is supposed to allow people to unlock their retirement savings. The amendments appear rushed, and every professional that was consulted by the NDP Caucus unanimously echoed that unlocking pensions is ill advised.
“Our team has spoken to credit counsellors, financial advisors, pension consultants, and plan managers who all said ‘I would not advise the unlocking of pensions’,” NDP Leader Alison Coffin said today. “Given the legislation, as written, would only take effect in March of 2021, we are left wondering what the motivation is to rush this legislation through before the end of the year.”
Corporate financial handouts, with no guarantees of return, continue to happen under the Liberal Government’s watch. The NDP Caucus is left wondering why this legislation was the end of year priority for government to help those who are struggling.
“The Liberal Government acts hastily to gamble public funds on corporate welfare whenever someone comes to them with a bridge to sell in Brooklyn, but when people are struggling, the solution is to make the workers pay for it,” said Coffin. “The Liberal Government could have spend the last few weeks lobbying Ottawa to do things that truly would have helped the people in need. We could be discussing extension of mortgage deferrals or interest free loans, instead we got legislation that was hastily written by cutting and pasting from other jurisdictions.”
The NL NDP Caucus concerns are included as an Appendix and have been provided to the Liberal Government House Leader, and the Minister of Service NL.
Concerns on Amendments to the Pension Benefits Act 1997
1. Where is the Cost Benefit Analysis on the amendments?
2. Will individuals be shielded from paying taxes on their withdrawal amounts, and how will this impact spousal or household income in the calculations?
3. Currently, CRA determines that a person can unlock up to 40% of Year’s Maximum Pensionable Earnings (YMPE) from a Locked-In Retirement Account (LIRA). Amendments seem to allow for up to 50% and seems. This would have a significant effect on a person’s retirement savings.
4. How do we protect spouses who might be coerced into signing the unlocking? What are the ramifications with respect to divorced couples, or dependent children?
5. Why is this based on future income?
6. There is no mechanism for sober second thought which could be provided by an independent, not-for-profit credit counsellor to ensure the individual is fully informed of the options available to them, and the impact of withdrawing from pension funds before their maturity date.
7. There is no mechanism whereby a person would pay back their withdrawal.
8. Will the unlocked amount be protected from creditors other than those intended to receive the funds to alieve financial distress?
9. A spouse’s consent and signature are required but the spouse’s income is not factored into determining if the person is eligible to unlock pension funds.
10. Has consideration been given to capping the amount, or proportion of a pension fund a person can withdraw?