Locked-In Retirement Account

A Locked-In Retirement Account (LIRA), and the virtually identical Locked-in Retirement Savings Plan (LRSP), are Canadian investment accounts designed specifically to hold locked-in pension funds for former plan members, former spouses or common-law partners, or surviving spouses or partners. Funds held inside LIRAs/LRSPs will normally only become available (or "unlocked") to holders upon retirement.

Meaning of Locked-In

The distinction between a LIRA/LRSP and an RRSP is that, where RRSPs can be cashed in at any time, a LIRA/LRSP cannot. Instead, the investment held in the locked-in account is "locked-in" and cannot be removed until either retirement or a specified age outlined in the applicable pension legislation (though certain exceptions exist). Another important distinction between regular RRSPs and LIRAs/LRSPs is that once funds have been transferred from a company pension plan to a LIRA/LRSP, further contributions cannot be made into said LIRA/LRSP. Any monetary amounts earned in the LIRA/LRSP through investment are also considered to be locked-in.

Provisions for holding a LIRA/LRSP

Employees who have Registered Pension Plans (RPP) and who remain with their company until retirement age will receive income for life at time of retirement. However, at the time of termination of membership in a company pension plan preceding retirement, death before retirement (whereby funds become property of surviving spouse or partner), or the breakup of marriage or common-law relationship, holders must transfer their funds into a LIRA/LRSP and hold them there until retirement.

Converting to LIF/LRIF/PRIF or Life Annuities

At retirement, holders must convert their LIRAs/LRSPs into Life Income Funds (LIF) or Locked-In Retirement Income Funds (LRIF) which will provide pension income during retirement. Instead of converting to a LIF or LRIF, holders may opt to use the proceeds of their LIRA/LRSP to purchase a life annuity from an insurance company.

It should be noted that under Saskatchewan legislation, LIRAs/LRIFs are instead called Prescribed Retirement Income Funds (PRIF).

Pension Legislation

LIRAs/LRSPs are registered either federally or provincially at the time of transfer from the company pension plan to the LIRA/LRSP. Though some accounts are registered federally, the bulk of locked-in accounts are registered under the legislation of a specific province. The primary differences which exist from province to province involve the minimum age required for withdrawal (i.e. when conversion to LIFs and LRIFs is possible) and the special provisions by which locked-in funds may be unlocked early.

Difference between LIRAs and LRSPs

LIRAs and LRSPs are essentially identical in structure. What determines one over another is the pension legislation of an individual's locked-in funds.

LRSPs are used for funds legislated in:
*British Columbia
*Nova Scotia
*Prince Edward Island
*Northwest Territories
*Federally (regardless of province)

LIRAs are used for funds legislated in:
*New Brunswick


* [http://www.ritceyteam.com/pdf/lockedin_plans.pdf] ScotiaMcLeod understanding locked in plans
* [http://www.gov.mb.ca/labour/pension/brochure/lira.html] Manitoba Pension Commission
* [http://www.advisor.ca/freezone_nologin/article.jsp?content=20011202_000000_0000] LIRAs, LIFs And LRIFs
* [http://www.tdcanadatrust.com/rifsandrios/lif.jsp#lrif] TDCanadaTrusts LIFs


* [http://www.bmo.com/mutualfunds/ps/lockedinplans.html BMO Locked-in Plans Breakdown]

Wikimedia Foundation. 2010.

Look at other dictionaries:

  • Locked-In Retirement Account - LIRA — A type of registered retirement savings alternative that locks in the pension funds in investments. While the funds are locked in, they are unavailable for cash out. Pension funds that are transferred to a LIRA are used to purchase a life annuity …   Investment dictionary

  • Locked In — A situation where an investor is unwilling or unable to exit a position because of the regulations, taxes or penalties associated with doing so. This may be an investment vehicle, such as a retirement plan, which can not be accessed until a… …   Investment dictionary

  • Registered Retirement Savings Plan — A Registered Retirement Savings Plan or RRSP is an account that provides tax benefits for saving for retirement in Canada. RRSP refers to a provision in the Income Tax Act that allows a person to shelter financial property from income taxes.RRSPs …   Wikipedia

  • Life Income Fund - LIF — In Canada, a type of registered retirement income fund that is used to hold pension funds, and eventually payout retirement income. The life income fund (LIF) cannot be withdrawn in a lump sum; rather, owners must use the fund in a manner that… …   Investment dictionary

  • Lira (disambiguation) — Lira may mean:* Lira, the currency of various countries, such as Italy (obsolete) and Turkey (replaced with New Turkish Lira as of January 1 2005) * Lira District in Uganda or its commercial centre; Lira a town in Uganda. * Lira (ISS), a… …   Wikipedia

  • List of finance topics — Topics in finance include:Fundamental financial concepts* Finance an overview ** Arbitrage ** Capital (economics) ** Capital asset pricing model ** Cash flow ** Cash flow matching ** Debt *** Default *** Consumer debt *** Debt consolidation ***… …   Wikipedia

  • performing arts — arts or skills that require public performance, as acting, singing, or dancing. [1945 50] * * * ▪ 2009 Introduction Music Classical.       The last vestiges of the Cold War seemed to thaw for a moment on Feb. 26, 2008, when the unfamiliar strains …   Universalium

  • china — /chuy neuh/, n. 1. a translucent ceramic material, biscuit fired at a high temperature, its glaze fired at a low temperature. 2. any porcelain ware. 3. plates, cups, saucers, etc., collectively. 4. figurines made of porcelain or ceramic material …   Universalium

  • China — /chuy neuh/, n. 1. People s Republic of, a country in E Asia. 1,221,591,778; 3,691,502 sq. mi. (9,560,990 sq. km). Cap.: Beijing. 2. Republic of. Also called Nationalist China. a republic consisting mainly of the island of Taiwan off the SE coast …   Universalium

  • Economic Affairs — ▪ 2006 Introduction In 2005 rising U.S. deficits, tight monetary policies, and higher oil prices triggered by hurricane damage in the Gulf of Mexico were moderating influences on the world economy and on U.S. stock markets, but some other… …   Universalium

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.