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Labour and Immigration

LOCKED-IN RETIREMENT ACCOUNT (LIRA)

The main objective of The Pension Benefits Act (the act) is to protect employees' rights to the benefits that are promised under private pension plans.  The following are answers to frequently asked questions (FAQ) about Manitoba's pension laws.  You should refer to the act for further information on Manitoba's pension laws.  To find out the details of your particular pension plan (the terms of your plan may be more generous than required by the act), you should contact the plan administrator.

NOTE: Descriptions of the various pension plan options and terms discussed in these answers can be found at the bottom of the page.

What is a Locked in Retirement Account (LIRA)?

A LIRA is an investment that allows your money (locked-in pension benefits) to keep growing and collecting interest until you retire. LIRAs replace locked-in Registered Retirement Savings Plans (RRSPs), although they operate in the same way. The Office of the Superintendent - Pension Commission (the Superintendent) has a list of financial institutions permitted to offer LIRAs.

Can I withdraw my Locked-in Retirement Account (LIRA) funds as a lump sum in cash?

Funds in a LIRA are governed by the provincial act and cannot be withdrawn as a lump sum in cash. They can be transferred to a Life Income Fund (LIF) at any age.

Who can transfer funds to a LIRA?

You may transfer funds to a LIRA, if:

  • You are a member of a defined contribution pension plan and you stop contributing to the plan. You may also transfer money if you have a Variable Benefit account under the plan (A Variable Benefit Account pays a LIF type payment from a pension plan).
  • You are a member of a defined benefit pension plan and stop contributing to the plan before you reach the plan's early retirement age.
  • You are a member of a defined benefit pension plan (if the plan allows) who no longer contributes to the pension plan after you reach the plan's early retirement age.
  • You are the spouse or common-law partner and your marriage or relationship with the plan member/owner has broken down.
  • You are the spouse or common-law partner of a plan member/owner who has died.
  • You are the owner of another LIF, LIRA or LRIF.
What is the Superintendent's Register of Authorized Institutions?

The Superintendent, Office of the Superintendent - Pension Commission keeps a list (or register) of institutions authorized to issue LIRAs. In Manitoba, if you have locked-in money, you can only transfer it to a LIRA if the financial institution issuing the LIRA has been registered and is on the Superintendent's Register of Authorized Institutions (Superintendent's Register).

For a copy of this list, contact the Office of the Superintendent - Pension Commission at (204) 945-2740 in Winnipeg; 1-800-282-8069, extension 2740 toll free; or go to http://www.gov.mb.ca/labour/pension/pdf/suptregister.pdf.

Can I transfer money from a LIRA?

Money can only be transferred from a LIRA to:

  • another LIRA
  • a LIF
  • a pension plan (if the plan permits) or
  • an insurance company to buy a life annuity
Is my LIRA protected from creditors?

Your LIRA cannot be assigned to another creditor or seized or attached by another creditor. Because of this rule, your LIRA cannot be used as collateral for a loan or to pay off debts of any kind.

Are there any exceptions to the locked-in clause?

You may be allowed to withdraw the balance of the LIRA if:

  • (a) you are not a resident of Canada (under the federal Income Tax Act ) and you have had that status for at least two years
  • (b) the total of all your money locked-in in Manitoba LIRAs, LIFs and LRIFs, plus interest at 6% per year to the end of the year you turn 65, is less than 40 percent of the Year's Maximum Pensionable Earnings (YMPE) for the year you applied for the withdrawal

    • To see if your funds are below the small amount limit so you can receive them as a lump sum:

    • You must annually add 6% interest to the balance of your funds for each year from December 31 of the year in which you apply for the withdrawal,, to the year that you are age 65.
    • You must check to see if the balance of your locked-in funds is less than 40% of the YMPE for the year you apply for a withdrawal.

      For example:

      John is age 55 on December 3. The current balance of all of his LIRAs, LIFs and LRIFs is $5,000.  Six percent interest is added annually to this balance from age 55 to age 65.  The balance of his funds with interest is $8,954.25.  For 2010, 40% of the YMPE is $18,800.  Since the balance of John's lock-in funds (with interest of $8,954.25) is less than $18,800, his funds can be unlocked and paid to him as a lump sum.

  • (c) you have a shortened life expectancy of less than two years
When is a joint, life pension waiver required?

If you, as a LIRA owner, have a spouse or common-law partner when you retire, the spouse or partner must receive a joint, life pension. This pension cannot be reduced to less that 60 percent at your death.

The joint life pension is not required if the funds were transferred to your LIRA because your relationship broke down or your spouse or former spouse or partner died.

Your spouse or partner may waive his/her claim to the joint, life pension by filing a written waiver with the administrator. A waiver is required when you, as the LIRA owner, choose to transfer money in your LIRA to:

  • a LIF
  • a pension plan that provides a pension that is not a joint, life pension that reduces to less than 60 percent at your death
  • a joint life pension plan that reduces benefits to 60 percent at your death or
  • a life insurance company to buy a life annuity that is not a joint, life pension
  • a life insurance company to buy a life annuity that is a joint life pension that reduces to less than 60 percent your death
Who will get the balance of the LIRA if I die?

If you are a plan member/owner and you die before retirement, your spouse or common-law partner will get the LIRA account balance. If you don?t have a spouse or partner, the balance goes to the beneficiary. If there is no beneficiary, it goes to your estate.

If the funds were transferred to your LIRA because your relationship broke down or your spouse or former spouse or partner died, the LIRA account balance may be paid to your beneficiary or to your estate in a lump sum.

Your spouse or partner may, before or after your death, waive (voluntarily give up) his/her rights (or potential rights) to the death benefit, after the plan administrator has given him/her prescribed information and he/she has signed a waiver and given it to the administrator of the LIRA. As a LIRA owner, you and your spouse or partner can revoke (cancel) the waiver by signing a joint letter or form and filing it with the financial institution that holds the LIRA.

Is my spouse or common-law partner entitled to my LIRA if our relationship breaks down?

If you are a plan member/owner and your marriage or common-law relationship breaks down, your spouse, former spouse or common-law partner will be entitled to receive money from the LIRA.

The amount must be 50 percent of the pension benefit credit earned during the period of the relationship. Your spouse, former spouse or partner may transfer his/her share of the LIRA to his/her own LIRA or LIF, or to an insurance company to buy a life annuity or pension plan (if the plan permits).

For general information on LIRAs contact a financial institution on the Superintendent's Register.

For information on your LIRA, contact your financial institution.

If you have more questions about the act or regulations, contact the Office of Superintendent - Pension Commission at (204) 945-2740 in Winnipeg; 1-800-282-8069, extension 2740 toll free; or go to www.gov.mb.ca/labour/pension.

Definitions

Defined benefit pension plan is a plan in which you as a member earn a pension based on service and earnings. These plans can be contributory (employees must make contributions) or non- contributory (the company makes contributions).

Defined contribution pension plan is a plan in which you receive, at retirement, the pension that can be bought through your company, based on the value of the contributions you (if required by the plan) and your employer made, plus interest.

Joint pension or survivor pension pays a benefit to you for life and, after your death, to your spouse or partner for life.

Locked-in Retirement Account (LIRA) is an investment that allows your money (pension benefits) to continue to grow and accumulate interest while being held (or locked in) in the fund until you retire. LIRAs replace locked-in, Registered Retirement Savings Plans (RRSPs), although they operate in the same way. A LIRA is a RRSP that is governed by the provincial act and holds locked-in pension funds until they are used for retirement.

Life Income Fund (LIF) is an investment that pays an adjustable amount of retirement income to the LIF owner, based on prescribed annuity factors. It must be at least the minimum amount stated in the federal Income Tax Act and the maximum amount stated in the provincial regulations under the Manitoba act.

Plan member/owner is a former member of a pension plan who transferred funds to a LIF.

Registered Retirement Income Fund (RRIF) is a personal retirement income fund that is governed by the federal Income Tax Act (Canada).

Registered Retirement Savings Plan (RRSP) is a personal retirement savings plan governed by the federal Income Tax Act (Canada).

Variable Benefit account is an account in a defined contribution plan that is used to pay LIF type payments.

Year's Maximum Pensionable Earnings is the term used to refer to employment earnings on which the Canada Pension Plan contributions and benefits are calculated.