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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.

The locked-in retirement account is designed to hold pension funds for a former plan member, former spouse or common-law partner or a surviving spouse or partner. The LIRA may be chosen at any age to hold funds transferred from a pension plan upon the termination of membership in a pension plan; the disintegration of a marriage or common-law partnership; or death before retirement. Unlike RRSPs, which can be cashed in whenever the owner decides, a locked-in retirement account does not provide such an option.

Difference between LIRAs and LRSPs.

LIRA refers to a provincial Locked-in Retirement Account, while LRSP refers to a federal Locked-in Retirement Savings Plan (RSP). The two accounts serve identical purposes.

LIRA Benefits
  1. Any growth will continue to be tax-free until you withdraw the money
  2. Control your investments—you decide how you invest your money
  3. Convert your LIRA to a Life Income Fund (LIF) or life annuity for your retirement income as allowed by the pension rules that govern your locked-in money.
  4. Name a beneficiary to receive your money after you’re gone—if you have a spouse, they may have priority as a beneficiary.