Illegal Unlocking Schemes Reported

Nova Scotians are being warned not to fall for ads that promise to convert locked-in pension funds into quick, tax-free money.

Recent classified ads in a local newspaper and on a Web site offer ways to provide advanced payments from locked-in pension funds. Anyone considering these options is warned that such payments are against the law in Nova Scotia and are subject to applicable income taxes.

"We're concerned that people who may be tempted by these offers won't even realize they are breaking the law," said Nancy MacNeill-Smith, superintendent of pensions for the province. "They need to understand they will be required to pay income taxes on the funds they receive."

Ms. MacNeill-Smith added that the purpose of the legislation that locks in pension funds is to ensure that those funds will be used to provide retirement income by the owners.

The Canada Customs and Revenue Agency (CCRA) warns individuals who respond to misleading advertisements that they risk losing their retirement savings and tax benefits.

The CCRA also advises consulting with a knowledgeable tax advisor before taking part in any scheme that promises a tax-free withdrawal of pension or registered retirement savings plans (RRSP) funds. Individuals, fund administrators and trustees can contact the CCRA at 1-800-959-8281 for more information.

For more information about these schemes or other pension-related issues, call the Pension Regulation division of the Department of Environment and Labour at 902-424-8915.