Manitoba Labour and Immigration

Locked-In Retirement Account(LIRA)

Revised August 2004

The Locked-in Retirement Account or "LIRA" is a special RRSP contract designed specifically to hold locked-in pension funds (which means the funds are not available as a cash refund) for a former plan member, former spouse or common-law partner, or surviving spouse or partner, as the case may be, and provides an alternative to leaving the funds in the pension plan.

Upon termination of membership in a pension plan, the breakup of the marriage or common-law relationship, or death before retirement, the LIRA may be chosen, at any age, to receive, and hold until retirement, locked-in pension funds transferred from a pension plan.

Pension funds transferred to a LIRA can not be cashed out, but must be used to purchase a life annuity from an insurance company, transferred to a Life Income Fund (LIF) or to a Locked-In Retirement Income Fund (LRIF). The Life Annuity, LIF and the LRIF provide a pension income for life, as required by pension law.

The LIRA owner may purchase a life annuity at any age, or transfer their pension funds to a LIF or to a LRIF at any time prior to the end of the year in which she/he turns the age specified in the Income Tax Act.

Which institutions sell LIRAs?

Financial institutions wanting to sell LIRAs must have their standard LIRA contract filed with and approved by the Pension Commission of Manitoba. The financial institution's name will be placed on the Superintendent of Pensions' List of LIRA Carriers.

To transfer locked-in pension funds to a LIRA, the applicant must choose a financial institution from the Superintendent's List of LIRA Carriers.

Important LIRA provisions

Each LIRA contract must include very specific provisions which are set out in legislation. A few of the major provisions are:

Joint Life Pension Waiver Form

If the LIRA owner is married or has a common-law partner as defined by the Act, at the time of retirement, the spouse or common-law partner must receive a pension for life that is at least 2/3 of the amount of pension the owner was receiving.  This type of pension can only be changed if both the member and spouse or partner sign a "Pension Waiver Form" obtained through the financial institution or the Pension Commission office.  A waiver is also required if the pension funds are to be transferred to a LIF or LRIF.

Death Before Retirement

Upon death before retirement of a LIRA owner, the surviving spouse or common-law partner must receive the locked-in pension funds and interest earnings, either as a transfer to his/her LIRA, LIF, LRIF  or as a Life Annuity.

Break-Up of the Marriage or Common-law Relationship

Upon break-up of the marriage or common-law relationship of a LIRA owner, pension funds and benefits must be split according to the requirements set out in the legislation, and the former spouse or common-law partner may transfer their share of the funds to a LIRA, LIF, LRIF, life annuity or registered pension plan if the spouse or partner is a member, provided that the plan will accept the transfer and administer the provisions of The Pension Benefits Act.

Transfers

No payment shall be made from the LIRA, except to another LIRA, another pension plan if the administrator agrees to administer the locked-in funds in accordance with the legislation, a LIF, a LRIF or to purchase a life annuity from an insurance company.

Protection Of Funds

The funds cannot be assigned charged or anticipated, and are exempt from seizure or attachment by creditors.

Gender Bias

The financial institution shall not offer or permit different options or benefits to be available based on the gender of the applicant.

Liability

The financial institution is liable to provide an amount equal to the value of any locked-in funds that are incorrectly paid or transferred.

Exception to the Locked-in clause

A LIRA contract may provide for a cash payment or series of payments to the LIRA owner only if, as certified by a qualified medical practitioner, the life expectancy of the individual has been significantly shortened, due to a mental or physical disability.

Where do I get a listing of approved institutions?

Copies of the most recent list of financial institutions with approved contracts may be obtained by contacting the Manitoba Pension Commission or viewing our Website.