Shortened Life Expectancy

Subsections 39(2) and (3) of The Pension Benefits Act, 1992 provide that funds held in a pension plan or a LIRA may be commuted to cash if the member or former member has a condition that is likely to considerably shorten that person's life expectancy. The individual must provide the plan administrator or issuer of the LIRA contract with medical evidence to substantiate the claim.

"39(2)  A plan may provide that, if a person entitled to the benefit has a condition that is likely to shorten considerably the person’s life expectancy, the person may, before payment of the pension commences, elect to convert, on the prescribed basis, the pension or part of the pension to a payment or series of payments for a fixed term to the person.

(3)  Where a benefit has been transferred to a prescribed RRSP, subsection (2) applies to the RRSP to which the benefit has been transferred.

(4)  The condition mentioned in subsection (2) must be certified by a duly qualified medical practitioner who has been approved by the administrator."

The pension plan administrator or the LIRA issuer is responsible for the administration of the shortened life expectancy provision. The government cannot authorize the release of the money.

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