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Pension Benefits and Other Savings: What's "Seizable" and What's Not!

What are the rules of seizure that apply to Quebeckers' retirement pension payments and retirement savings?

Exempt from seizure

  • Benefits paid under the federal Old Age Security program.
  • Benefits paid under the Act respecting the Québec Pension Plan.
  • Benefits accumulated in supplemental pension plans (SPPs) subject to the Supplemental Pension Plans Act, or public-sector plans, such as the Government and Public Employees Retirement Plan (GPERP), the Teachers Pension Plan (TPP) and the Civil Service Superannuation Plan (CSSP).
  • Any sum coming from an SPP subject to the Supplemental Pension Plans Act, for example, sums paid in the form of a benefit or refund or sums transferred to an annuity contract, a locked-in retirement account (LIRA), a life income fund (LIF), a registered retirement savings plan (RRSP) or a registered retirement income fund (RRIF).
  • RRSPs offered by insurers and trust companies if they are annuity contracts and if the designated beneficiary is the spouse, descendant or ascendant of the RRSP holder or any other irrevocably designated beneficiary.

There are some exceptions, including:

  • 50% of retirement and disability pensions paid under the Act respecting the Québec Pension Plan can be seized for payment of delinquent support payments.
  • Additional voluntary contributions to an SPP as well as sums from a not locked-in account in a simplified pension plan become seizable when they are no longer in the SPP, for example, when they have been transferred to an RRSP.
  • Benefits accumulated in an SPP referred to in section 2.1 of the Supplemental Pension Plans Act (an SPP for major shareholders and that is not registered with Retraite Québec) become seizable when they are no longer in the SPP.
  • When an SPP subject to the Supplemental Pension Plans Act is terminated, any surplus assets allocated to a member, a beneficiary or the employer are seizable.
  • 50% of the benefits accumulated in an SPP can be seized for payment of delinquent support payments.
  • 50% of the benefits accumulated in an SPP can be seized for carrying out partition of family patrimony or payment of a compensatory allowance.
  • 50% of the sums coming from an SPP subject to the Supplemental Pension Plans Act­—in particular LIRAs, LIFs, RRSPs, RRIFs and annuity contracts that are usually unseizable—can be seized for payment of delinquent support payments.
  • 50% of the sums coming from an SPP subject to the Supplemental Pension Plans Act—in particular LIRAs, LIFs, RRSPs, RRIFs and annuity contracts that are usually unseizable—can be seized for carrying out partition of family patrimony or payment of a compensatory allowance.
  • Federal tax authorities can seize for payment of tax debts any benefits coming from an SPP or an LIF.

Seizable

  • RRSPs that do not meet the conditions to be unseizable (see above).
  • RRIFs and RRSPs whose holdings are not limited solely to sums transferred from an SPP subject to the Supplemental Pension Plans Act.
  • In general, all other forms of retirement savings [top-hat plans, deferred profit-sharing plans (DPSPs), employee profit sharing plans (EPSPs), retirement agreements, etc.].

Exception

RRSPs, RRIFs and DPSPs become unseizable in the case of bankruptcy, except for contributions made during the 12 months prior to bankruptcy.

Note...

  • All unseizable sums remain as such in the case of the bankruptcy of a beneficiary, member or annuitant.
  • Unseizable sums become seizable when they are commingled with seizable sums, for example, when an unseizable pension benefit received from an SPP is deposited in a bank account, RRSP or RRIF in which seizable sums are also deposited.

Worth knowing about...

  • For all SPPs not mentioned here, contact the competent authority to find out whether contributions or benefits are seizable.
  • Those who live outside Québec and have contributed to both the Canada Pension Plan (CPP) and the Québec Pension Plan (QPP), as well as workers who have contributed only to the CPP, should contact Employment and Skills Development Canada regarding the rules of seizure that apply to CPP benefits.
  • Québec residents who have contributed to both the CPP and the QPP are subject to the rules of seizure set out in the Act respecting the Québec Pension Plan.

The advantages of exemption... for debtors

The main advantage of exemption from seizure is that the amounts owing under the plans cannot be seized by creditors.

People facing financial difficulties can still count on their retirement benefits to provide a decent minimum income.

The disadvantages of exemption... for creditors 

For some people, exemption from seizure can become a way to avoid paying debts. However, their credit rating will be adversely affected by the fact that some of their assets cannot be seized.

Other useful information