Office of the Superintendent - Pension Commission
Office of the Superintendent - Pension Commission
Policy Bulletin # 1 ~ Locked-In Retirement Account (LIRA)
1
Policy Bulletin #1
Issue Date: April 21, 2010
Last Updated: November 15, 2017
Locked-In Retirement Account (LIRA)
Reference:
The Pension Benefits Act Sections 21(13), 26(26.2) and 31(4)(b), and the Pension
Benefits Regulation Divisions 1 and 2, Part 10
Locked-In Retirement Account (LIRA)
The Locked-in Retirement Account or "LIRA" is a Registered Retirement Savings Plan (RRSP)
that is subject to the provisions in The Pension Benefits Act (Act) and Pension Benefits
Regulation 39/2010 (regulation). The LIRA is designed only for holding and investing Manitoba
locked-in money transferred from a pension plan until it is transferred to another vehicle
permitted under the regulation to provide retirement income at any age.
Who qualifies
Manitoba locked-in money may be transferred to a LIRA by
a member of a defined contribution pension plan who ceases to be an active member,
or who has a Variable Benefit account under the plan;
a member of a defined benefit pension plan who ceases to be an active member before
reaching the early retirement age stated in the member’s pension plan;
a member of a defined benefit pension plan who ceases to be an active member after
reaching the early retirement age stated in the member’s pension plan
, if the plan
permits;
the spouse or common-law partner on breakdown of a marriage or common-law
relationship;
the spouse or common-law partner on death of the member;
the owner of another LIRA or a Life Income Fund (LIF); or
a member of a pooled registered pension plan (PRPP).
LIRA requirements
Subject to those exceptions outlined in this bulletin under “Exceptions to the Locking
-in rule
”,
money in a LIRA can not be withdrawn in cash at any time. Instead, the LIRA account balance
can be transferred at any time but no later than the end of the year in which the LIRA owner
attains age 71 to another vehicle permitted under the regulation to be used for retirement
purposes.
Registration of Financial Institutions
A transfer of Manitoba locked-in money to a LIRA can be made only if the financial institution
issuing the LIRA has been registered by the Superintendent.
Office of the Superintendent - Pension Commission
Policy Bulletin # 1 ~ Locked-In Retirement Account (LIRA)
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Registration involves
a. applying to the Superintendent for registration; and
b. receiving notification in writing that the Superintendent has registered the institution in
relation to the LIRA and placed it on the Superintendent’s
Register of Authorized
Financial Institutions.
The Superintendent may revoke registration if the financial institution fails to comply with any
provision of the Act or regulation.
Superintendent’s Register of Authorized Institutions
Copies of the most recent
Superintendent’s Register of Authorized Institutions (
Superinten
dent’s
Register) may be obtained by contacting the Office of the Superintendent - Pension
Commission or viewing our website at
http://www.gov.mb.ca/labour/pension
.
Member-owner
A member owner is someone who ceased to be an active member of a pension plan while
employed in Manitoba, and some or all of the money in his or her LIRA is attributable, directly or
indirectly, to the pension benefit credit that he or she earned as a member of the pension plan.
Transfers to LIRAs
Money can only be transferred to a LIRA from
another LIRA or LIF;
a pension plan (if the plan permits); or
a PRPP.
The financial institution or administrator making the transfer to the LIRA must advise the
institution receiving the money, in writing, that the money is Manitoba locked-in money.
Transfers from LIRAs
Money can only be transferred from a LIRA to
another LIRA or LIF;
a pension plan (if the plan permits);
an insurance company to purchase a life annuity contact; or
a PRPP (if the plan permits).
If permitted under the terms of a defined contribution pension plan (DC Plan), generally means
the DC Plan permits an owner to transfer his or her LIRA funds to the DC Plan, which
administers it as a “locked
-
in” additional voluntary contribution.
If permitted under the terms of a defined benefit pension plan (DB Plan), generally means the
DB Plan permits an owner to transfer his or her LIRA funds to the DB Plan to be administered
as a “locked
-
in” additional voluntary contribution or used for purposes of purchasing
pensionable service under that DB Plan.
Office of the Superintendent - Pension Commission
Policy Bulletin # 1 ~ Locked-In Retirement Account (LIRA)
3
If the LIRA funds will be used to buyback pensionable service under the DB Plan, all the
conditions precedent to transfer set out in subsection 10.21 of the regulation continue to apply
to the administrator of the LIRA, with one exception. Rather than the administrator of the LIRA
obtaining written confirmation from the administrator of the DB Plan that the transferred amount
will be administered as Manitoba locked-in money, the administrator would instead obtain
written confirmation from the administrator of the DB Plan that the transferred amount will be
used to buyback pensionable service under the DB Plan and provide the owner with a pension,
retirement income or annuity in accordance with the terms of the DB Plan.
The financial institution making the transfer must
advise the administrator, financial institution or insurance company receiving the money,
in writing, that the money is Manitoba locked-in money; and
provide a copy of any waiver or consent by the member-owner and spouse or common-
law partner that has not been revoked to the administrator, institution or insurance
company receiving the money.
Joint Pension Waiver Form Required
If a LIRA member-owner has a spouse or common-law partner at retirement, the spouse or
partner is entitled
to a joint pension on the owner’s death that must be at least 60% of the
pension that was payable to the member-owner.
The spouse or common-law partner may waive his/her entitlement to the joint pension after
receiving prescribed information, completing
Form 5A - Waiver of 60% Joint Pension
Entitlement for Pension Plan or Locked-in Retirement Account
according to section 10.22 of
Division 2 of Part 10 of the regulation, and filing the waiver with the administrator. The waiver is
required when the LIRA member-owner elects to transfer money in his or her LIRA to
a LIF;
a pension plan to provide a pension that is not a joint pension or is a joint pension that
reduces to less than 60% on the o
wner’s death;
a life insurance company to purchase a life annuity that is not a joint pension or is a joint
pension that reduces to less than 60% on the owner’s
death; or
a PRPP.
Death benefit
When a member-owner dies before retirement, the spouse or common-law partner is entitled to
the LIRA account balance. Where there is no spouse or partner, the account balance must be
paid to the beneficiary, or where no be
neficiary exists, to the owner’s estate.
A spouse or common-law partner may, before or after the LIRA member-
owner’s death, waive
his or her entitlement or potential entitlement to the death benefit after receiving prescribed
information, completing
Form 2 - Waiver of Survivor or Death Benefit
according to section 10.25
of Division 2 of Part 10 of the regulation, and filing the waiver with the administrator.
A death benefit waiver may be revoked by the LIRA member-owner and his or her spouse or
common-law partner by signing a joint revocation and filing it with the financial institution.
Office of the Superintendent - Pension Commission
Policy Bulletin # 1 ~ Locked-In Retirement Account (LIRA)
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If the LIRA owner is a former or surviving spouse or partner of a plan member, the LIRA account
balance must be paid to the designated beneficiary, or estate, in a lump sum.
Breakdown of a Marriage or Common-law Relationship
Upon breakdown of the marriage or common-law relationship of a LIRA member-owner, the
spouse, former spouse or common-law partner will be entitled to receive an amount from the
LIRA that is equal to 50% of the pension benefit credit earned during the period of the
relationship. The spouse, former spouse or common-law partner may transfer their share of the
LIRA to his or her own LIRA or LIF, to an insurance company to purchase a life annuity or
pension plan (if the plan permits), or to a PRPP.
See
Policy Bulletin # 5
–
Pension Benefit Division
for further information.
Exceptions to the locking-in rule
See
Policy Bulletin #4 - Withdrawal or Unlocking of LIRAs and LIFs
for further information on
Small Amounts, Shortened Life Expectancy and Non-Residency.
Small Amounts
The owner of a small LIRA can withdraw the entire balance. Section 10.65 of Division 6 of Part
10 of the regulation sets out rules for determining whether a locked-in account is small. These
rules are based on
a percentage of the Year’s Maximum Pensionable Earnings (YMPE) under
the Canada Pension Plan.
NOTE: There are no forms required under the Act and regulation, i.e. consent or waiver, for
withdrawing small LIRAs and LIFs (locked-in accounts).
If the total
of the balances of all the owner’s l
ocked-in accounts is considered small under the
regulation, the owner is entitled to withdraw the entire balance of those accounts. An owner's
locked-in account is small if the total of
a) the balances of all the owner's locked-in accounts; and
b) if the owner is less than 65 years old, interest on those balances, calculated and
compounded annually at the rate of 6% per annum from December 31 of the year in
which the application is filed to the end of the year in which the owner turns 65 years
of age;
is less than 40% of the YMPE for the year in which the owner applied for the withdrawal (small
amount limit) ($20,440.00 for 2013).
Shortened Life Expectancy
A LIRA owner who has a terminal illness or disability resulting in a shortened life expectancy
might be entitled to withdraw all or any part of the balance of his or her locked-in account.
Sections 10.68 to 10.70 of Division 7 of Part 10 of the regulation set out rules for determining
whether he or she may make the withdrawal. “
Shortened life expectancy" means a life
expectancy that has been shortened by reason of a terminal illness or disability to less than two
years.
Office of the Superintendent - Pension Commission
Policy Bulletin # 1 ~ Locked-In Retirement Account (LIRA)
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Non-Residency
If a LIRA owner satisfies Canada Revenue Agency (CRA) that, under the federal Income Tax
Act, he or she is no longer a resident of Canada, and has had that status for at least two years,
the owner might be entitled to withdraw the balance of his or her account under
subsection 21.1(3) of the Act, if the contract permits. Sections 10.60 to 10.62 of Division 5 of
Part 10 of the regulation set out rules for determining whether he or she may make the
withdrawal.
Proof of non-residency may be requested from CRA by completing and filing Form NR73
–
Determination of Residency Status (Leaving Canada) with CRA. This form can be obtained
from CRA’s
website at
www.cra.gc.ca
or by calling 1-800-959-2221.
Maintenance Enforcement
The garnishment of Manitoba locked-in money held in locked-in accounts by a Designated
Officer of the Maintenance Enforcement Program of Manitoba Justice is permitted by sections
14.1 to 14.3 of The Garnishment Act of Manitoba and section 31.1 of The Pension Benefits Act.
Division 9 of Part 10 of the regulation sets out additional rules for garnishment.
See
Policy Bulletin #11 - Maintenance Enforcement - Garnishment of Pension Benefit Credits,
for further information.
Protection of LIRA Money
The LIRA cannot be assigned, charged or anticipated, and is exempt from seizure or
attachment by creditors. As a result the money can not be used as collateral for a loan, or used
to pay off debts of any kind.
Gender Basis
The financial institution shall not offer or permit different options or benefits to be available
based on the gender of the LIRA owner.
Liability
The financial institution is liable to provide an amount equal to the value of any Manitoba locked-
in money that is incorrectly paid or transferred.
Who to contact for information
If you have any questions regarding this bulletin please contact:
Office of the Superintendent - Pension Commission
1004
–
401 York Avenue
Winnipeg MB R3C 0P8
Phone: (204) 945-2740
e-mail:
pensions@gov.mb.ca
This bulletin has no legal authority. The Pension Benefits Act of Manitoba and the Pension Benefits Regulation
39/2010 should be used to determine specific requirements.
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