Converting Pension Assets

Benefits that are locked-in must be used to provide you with a retirement income stream when you retire, which means that you cannot withdraw money directly from your pension or LIRA or LRRSP before you retire. However, just because your benefits are locked-in, it doesn’t mean that your benefit must stay in the same account until retirement. Locked-in benefits may be transferred to locked-in retirement income vehicles or used to purchase an annuity at any time after retirement age and no later than the end of the year in which you reach age 71.

The generic term for a retirement income vehicle is a life income fund (LIF). Some provincial jurisdictions also allow a locked-in retirement income fund (LRIF) and in Saskatchewan, a prescribed RRIF (PRRIF) is permitted. You should consult your financial advisor or pension administrator for accurate information pertaining specifically to your pension plan. Conversion options vary by provincial residence and pension jurisdiction. At a minimum, provincial or federal regulations allow a life annuity or LIF to be selected.

Consult with your financial advisor to determine the choice of vehicle to purchase and the best timing to make that purchase. You may split your LIRA or LRRSP into more than one income vehicle.

In summary, your vehicle options are:

  • LIF or similar account depending on your pension jurisdiction
  • RLIF (federal and some provincial jurisdictions)
  • LRIF (Newfoundland and Labrador)
  • Prescribed RRIF (Manitoba and Saskatchewan)
  • Life annuity

Conversion of locked-in money to a life annuity or income vehicle may not occur earlier than age 50 or 55 depending on the applicable pension jurisdiction.