Withdrawals from Pension Plans Due to Financial Hardship or Medical Disability Costs

In Canada, did you know that you (or members of your pension plan – if registered under the Pension Benefits Standards Act, 1985) may be able to make one or more withdrawals from your pension plan for financial hardship or disability?

For financial hardship, the amount that can be unlocked depends on your expected income. If your income is projected to be zero, you can make a withdrawal up to 50% of the YMPE (Year’s Maximum Pensionable Earnings). In 2015, the YMPE is $53,600.

Note that you can make more than one withdrawal for financial hardship in a calendar year, but you only have 30 days after the first withdrawal to make another withdrawal.

If your projected income is 75% of the YMPE, you are not eligible to unlock or withdraw for financial hardship.

You can also unlock for medical or disability costs, if those costs are expected to be 20% or greater of your expected income in the calendar year. If they are, you can withdraw an amount up to the full medical disability cost, to a maximum of 50% of the YMPE. The YMPE for 2015 is $53,600, so you can withdraw a maximum of $26,800.

There are a number of forms to fill out to make a withdrawal for financial hardship or medical costs. Please contact your Penad administrator for more information.