iAtoday

On June 19, the Government of Quebec published the final version of the Regulation to amend the Regulation respecting supplemental pension plans (the Regulation). This Regulation modifies the rules for the:

• Disbursement of life income funds (LIFs), and
• Variable benefits from defined contribution (DC) pension plans

The proposed regulation, published in December 2023, provided for certain changes to take effect on July 1, 2024, but the official Regulation confirms that all changes will take effect on January 1, 2025.

Highlights of the changes for funds held in a LIF or a DC plan offering variable benefits:

• Members aged 55 and older: Funds will not be subject to a maximum annual withdrawal limit. These members will be able to withdraw their funds in whole or in part, in a single payment or in several instalments.
• People under age 55: New calculation rules will apply to the maximum annual withdrawal limit.
• Calculation of temporary income: The calculation for members under age 55 will be modified and members aged 55 and older will no longer be able to request it.
• New communications requirements for people aged 55 and older: To inform them of their new withdrawal rights and the new estimated lifetime income that their funds could provide up to age 95.
• Direct transfer restrictions: Funds from a LIF cannot be transferred directly to a registered retirement savings plan (RRSP), a registered retirement income fund (RRIF) or a non-locked-in account in a voluntary retirement savings plan (VRSP).
• Disbursement rules: Will be determined according to the age of the person as at the date of application for a life income or temporary income, rather than their age as of December 31 of the year prior to their LIF withdrawal.
• Greater flexibility with the disbursement strategy: Permitting the withdrawal of the maximum annual amount as of age 55 will give the people of Quebec the opportunity to delay the start of their government benefits, since they will be able to withdraw larger amounts from their LIF or certain DC pension plans in the early years of retirement. It will, however, be important to inform them of the impact that early retirement or higher withdrawals could have on their financial health in retirement.
• Locked-in retirement account (LIRA) rules: The Regulation does not change locking-in rules for the LIRA.