Ontario Budget 2009: Unlocking LIFs – increased from 25% to 50%

The good news for older Canadians who have locked in funds [LIFs] is that they will now be able to unlock up to 50% of their LIFs, up from the limit of 25%. CARP has called for full unlocking to allow people to access their own money, especially in these difficult economic times. In fact there could be more tax revenues as people spend on their immediate needs.

CARP has also called for the elimination of the fees payable when people get their fundes unlocked through financial hardship applications. Budget 2009 proposes to waive the fees – 2% of the amount withdrawn – minimum $200 to maximum of $600 –for 2 years only. CARP calls for a permanent elimination of these fees.

It’s bad enough that people in dire financial circumstances can’t get at their own money without a lot of bureaucracy – the fees were an unnecessary extra burden and should be eliminated permanently but CARP members will appreciate this temporary relief. It shows that the government is listening.

CARP highlighted unlocking LIFs and removal of the unlocking fee in hardship cases in its pre-budget submission and in informal discussions with the office of the finance Minister. They met us halfway.

But CARP cautions that unlocking LIFs also mean that the funds are no longer creditor proof which is an important consideration in difficult economic times.