The LIRA is a registered retirement savings vehicle in Canada that is an essential step for any worker leaving a job with an employer pension plan (RPP). Its main goal is to preserve and grow locked-in funds to guarantee a stable income in retirement.
A LIRA is an account specifically designed to receive and hold locked-in funds from your former pension plan. "Locked-in" means these funds generally cannot be withdrawn before retirement age, ensuring this savings remains dedicated to your future.
Funds deposited into a LIRA come exclusively from the transfer of accumulated rights in an employer pension plan.
Transferred funds are not taxed at the time of transfer. Full maintenance of tax benefits.
Investment income (interest, dividends) grows entirely tax-sheltered.
Taxation occurs only upon withdrawal during retirement (taxed as income).
A LIRA cannot be kept indefinitely. By the end of the year you turn 71, it must be converted to provide income.
The most common option. It allows flexible income, but is subject to annual minimum and maximum withdrawal limits.
Guarantees a fixed and regular income for the rest of your life from an insurer.
"The LIRA is your guarantee for transferring the benefits of your former pension fund safely and tax-efficiently towards your new retirement investment strategy."
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