A Locked-In Retirement Account (LIRA) holds pension money that has been transferred out of a registered pension plan — typically when you leave an employer before retirement. The "locked-in" aspect means you can't freely withdraw the money; it must eventually be used to provide retirement income. Understanding LIRA rules is essential if you've left a pension plan with a commuted value transfer.
A LIRA is a registered account that holds pension funds transferred out of a defined benefit or defined contribution pension plan. It looks similar to an RRSP in structure — you can invest the funds in stocks, bonds, GICs, ETFs, and mutual funds — but unlike an RRSP, you cannot withdraw from it freely.
The purpose of the lock-in is to ensure the pension money is actually used for retirement income, as the law and the original pension plan intended.
LIRA rules are governed by the jurisdiction whose pension legislation covered your original plan:
The jurisdiction follows the money — if your pension was under Ontario legislation, your LIRA is governed by Ontario's Pension Benefits Act, regardless of where you live now.
This is the most common question. Rules vary by province:
In most provinces (Ontario, BC, Alberta, Manitoba, etc.), you cannot access LIRA funds before age 55. At 55, you can convert the LIRA to a Life Income Fund (LIF) and begin withdrawing within LIF minimum and maximum limits.
Federal LIRAs can be unlocked and converted to a Life Income Fund (LIF) starting at age 55. You can also withdraw up to 50% as a one-time unlocking at age 55 under federal rules (transferred to an RRSP or RRIF).
If your LIRA balance is below a threshold (varies by province, typically 20–40% of the YMPE), you may be able to unlock the full balance and withdraw it as cash (taxable) or transfer to an RRSP/RRIF. As of 2025, the Ontario threshold is approximately $27,400 (40% of YMPE).
Some provinces allow unlocking for financial hardship under specific criteria — typically involving low income, high medical expenses, pending eviction, or disability. Ontario, BC, and Alberta all have hardship provisions.
If a physician certifies you have less than 2 years to live, most jurisdictions allow full unlocking and withdrawal regardless of age or balance.
If you've been a non-resident of Canada for at least 2 years, you can typically apply to unlock and collapse a LIRA (taxable as income in the year of withdrawal, subject to any tax treaty).
A LIRA can hold the same investments as an RRSP: GICs, mutual funds, ETFs, individual stocks and bonds. The investment growth is tax-deferred. Most people hold diversified portfolios inside their LIRA, targeting long-term growth since the funds won't be accessible for years.
LIRAs are available at all major banks, credit unions, and online brokerages (Wealthsimple, Questrade, etc.).
The LIRA must be converted to a Life Income Fund (LIF) — or in some provinces a Locked-In Retirement Income Fund (LRIF) or Prescribed Retirement Income Fund (PRIF) — by December 31 of the year you turn 71, at the latest. Most people convert earlier when they want to start drawing income.
The LIF imposes both minimum withdrawals (similar to RRIF minimums, based on age) and maximum withdrawals (preventing you from depleting the fund too quickly). Provinces set the maximum rates annually.
Whether you have a pension or not, free banking helps you save more. KOHO offers free banking with no monthly fees and no minimum balance. Use code 45ET55JSYA for a bonus when you sign up.
Open KOHO Free — Code 45ET55JSYA