Locked-in Retirement Account

Investment & Savings

Locked-in Retirement Account (LIRA)

The acronym LIRA stands for Locked in Retirement Account. 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 55th 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 Account (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.


A LIRA is like an RRSP, but the funds in the plan come from a pension plan instead of RRSP contributions. Unlike an RRSP, a LIRA has terms and conditions.

The two main reasons that many clients may choose to put their pension into a LIRA are:

  • Concerns that leaving a pension with a former employer who may go out of business, go bankrupt, or have major operational problems which could impact their pension funds.
  • Clients feel that their time with their company or union has come to a close and they would like to take their pension funds with them, and be in control of them.

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 losing 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”.

Many pensions do not provide guaranteed payout to spouses, children, or other beneficiaries. A LIRA ensures that spousal beneficiaries will receive some income for life from the locked-in pension.  Child beneficiaries almost always receive a payout. In some cases, the pension may never benefit the family of the deceased at all.  A LIRA ensures that this never happens.

Key Features of a LIRA

  • Locked-in Funds: The funds held in a LIRA are “locked in” and cannot be withdrawn as cash. They must remain in the account until the individual reaches the prescribed retirement age, which is typically between the ages of 55 and 71, depending on the province.
  • Limited Withdrawals: In general, withdrawals from a LIRA are restricted. However, there are specific circumstances under which withdrawals may be allowed, such as financial hardship, disability, or shortened life expectancy. Each province has its own regulations regarding these withdrawals.
  • Investment Options: LIRAs provide a range of investment options similar to other registered retirement accounts. The account holder can choose to invest the funds in various assets such as segregated funds, bonds, mutual funds, stocks, or guaranteed investment certificates (GICs).
  • Tax Treatment: Similar to other registered retirement accounts, LIRAs offer tax advantages. Contributions made to the account are tax-deductible, and investment growth is tax-deferred until withdrawals are made.
  • Conversion Options: At the prescribed retirement age, the LIRA can usually be converted into a Life Income Fund (LIF) or a Locked-In Retirement Income Fund (LRIF). These options provide a regular stream of income during retirement while still maintaining some restrictions on withdrawals.

For information regarding the rules and regulations of LIRA pensions in Alberta:

We encourage you to reach out to our team to find out more about these options to see if they are right for you.

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For 26 years Pinkney Financial Services has been a very important part of my financial future. I’m most grateful for everything they have done for me over these many years.
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Retired Edmonton Public Teacher

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