What is a LIRA?

This is an option available to individuals with a workplace pension plan. If you should leave before you reach retirement age and the terms of your pension permit, you may be able to transfer your accumulated pension benefits into a locked-in account. The funds can then be invested in the same way as you would invest an RSP. However, there are a number of other restrictions. For example, some provinces do not allow a LIRA to contain the holder's mortgage. Since funds in a locked-in RSP originate from a workplace pension plan, it is subject to the rules and regulations governed by the pension regulatory authorities at federal and provincial levels. Locked-in RSPs are now generally referred to as Locked-In Retirement Accounts (LIRAs). The Pension legislation requires the funds in a locked-in RSP be used to provide a lifetime income for the holder. What does this mean? You will receive the payments over time and can neither make a lump sum withdrawal or can you cash it in at any time.