Unlocking due to Shortened Life Expectancy – Physician’s Certification

Under the Pension Benefits Standards Act, 1985 (PBSA), and the Pension Benefits Standards Regulations, 1985 (PBSR), a pension plan or a prescribed retirement savings plan (RSP) may provide that funds may be paid in a lump sum to a member, former member or holder of an RSP in instances where a physician certifies that a mental or physical condition (or disability) is likely to shorten considerably the life expectancy of the member, former member or holder of an RSP. 

There is no requirement under the PBSA or PBSR for a plan administrator or financial institution to verify a physician’s certification.  A physician’s certification must state that a mental or physical condition (or disability) is likely to shorten considerably the life expectancy of the member, former member or holder of an RSP.  If a physician’s certification does not contain such a statement, then administrators or financial institutions should not unlock the funds.

If the administrator or financial institution has concerns regarding the validity of physician certifications that they are receiving, they should consider referring the matter to the regulatory body overseeing physicians in that province.

Under the new Pooled Registered Pension Plans Act and the Pooled Registered Pension Plans Regulations, a Pooled Registered Pension Plan may also provide that a member may withdraw the funds in their account due to disability if a physician’s certification is obtained.