Since the beginning of 2020 there have been many updates to the pension legislation, some were quite straight forward, others however confused a lot of pension members – so Freisenbruch decided to take the ‘bull by the horns’ and breakdown it down to make it far more easier to understand.
Firstly, the changes provide greater flexibility and impact anyone who is currently in a defined contribution pension plan or local retirement product (sorry defined benefit members, that excludes you), and some changes are temporary, while others have been incorporated into the Pension Act itself.
The first piece of permanent legislation that has caused confusion is the parameters around the 25% lumpsum withdrawal, this legislation allows members in the above noted pension plans to make a onetime 25% pension withdrawal if you are 65 years of age or older – listen ‘Freisenbruch Insight’ for all the details.
The second piece of permanent legislation were changes to the existing ‘Small Pension Balance’. The previous small pension balance legislation allowed any defined contribution pension plan members or local retirement product members who had a balance under the prescribed small pension balance amount to make a full withdrawal of their pension upon retirement or termination. However, new legislation is slightly different, firstly you need to be 65 years or age or older and your account balance (including all sources) must be $50,000 or less – listen ‘Freisenbruch Insight’ for further details.
The last significant piece of legislation is temporary, and will expire as of June 30th, 2021. This piece of legislation allows the above noted pension members who are under the age of 65, to make a onetime withdrawal of up to $12,000 from their locked-in vested portion of their pension plan. There are few other details, listen to ‘Freisenbruch Insight’ to hear the scoop.
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