The acronym LIRA stands for Locked In Retirement Account or Pension. It refers to pension money accumulated in a pension with an employer or Union which is transferrable when an individual leaves their job or union before their 55 birthday.

There are 3 main choices individuals might consider in determining what to do with pension money:

Scenario 1 – Place the funds in a Locked-in Retirement Plan (LIRA).

Scenario 2 – Leave the pension where it is with the former employer or union and draw on these funds sometime between the ages of 55-71.

Scenario 3 –Purchase an annuity (See: Is buying an annuity a good idea?).

With the majority clients we see, the main option chosen is a LIRA account for two main reasons:

1. Concerns with leaving a pension with a former include the employer going out of business, going bankrupt, or has any major operational problems that their pension money might be impacted or disappear.

Clients who feel “My life with company X (or Union X) is over, and I want to take my pension money with me to keep it under my control.

Union members leaving their Local sometimes feel “I do not know who will be looking after the pension money in the future, the Local is loosing members and the money may not be properly handled and I do not want to leave it with people I will not know or who have no related qualifications, and where I have no access or control”.

2. Many pensions do not provide guaranteed payout to children or other beneficiaries. If the individual has a wife or children the LIRA ensures that their spouse will receive some income for life from the locked-in pension, and in the case of child beneficiaries almost always they will end up with some payout. In some cases where the pension holder passes the lion’s share of the pension may never benefit the family of the deceased at all.

Provincial legislation affects how a LIRA pension can be directed and accessed with the exception being employees who have worked directly for the Government of Canada including Canada Post employees and the RCMP in which case the rules fall to the federal government.

For information regarding the rules and regulations of LIRA pensions in Alberta see: https://www.alberta.ca/pensions-individuals.aspx