MARKET COMMENTARY

Locking in Pension Money

Leaving a company triggers decisions about what comes next for money you have in the firm’s registered pension plan. We highlight the in’s and out’s of opening a LIRA.

01.01.2017 - Stephen D. Wilton, Investment Fund Specialist

Locking in Pension Money

Regardless of the reason, leaving a company triggers decisions about what comes next for the money you have in the firm’s registered pension plan. Generally speaking, that money can remain locked in your former employer’s pension plan until you retire. Or, you can transfer the accumulated value to an instrument such as a Locked-In Retirement Account (LIRA). Stephen Wilton, Investment Fund Specialist, FTC Investor Services Inc., takes a closer look at that decision and living with a LIRA.

Q: What are some first things to know about a LIRA?

Stephen Wilton: Working with clients, we recommend identifying whether your pension accumulated under a federal or provincial jurisdiction and, if the latter, which province. Knowing this from the outset makes a real difference in many ways. For example, the answer determines whether you establish a LIRA or a Locked-In Retirement Savings Plan (LRSP). Given their similarity, I am going to simply use the term LIRA. Know that you cannot contribute any more money to your LIRA, and the funds remain locked in the account until a specific age, as defined by pension legislation that varies by jurisdiction.

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