What is a LIRA?
A LIRA is better known as a locked-in RRSP. The rules found
in the Income Tax Act with respect to an RRSP apply to your LIRA. Therefore, you
must purchase a life annuity or transfer money to a RRIF or a
Variable Benefit Account by the end of the calendar year
in which you reach 71 years of age. You also must follow the rules for investing an RRSP
found in the Income Tax Act when investing your LIRA money.
Can I withdraw money from my LIRA?
Generally, no. "Locked in" means that the money
in the LIRA cannot be withdrawn or surrendered and must ultimately be used to provide you
with a pension.
Please refer to our bulletin "Unlocking Pension
Money" for an explanation of the exceptions to the rules locking in pension money.
Saskatchewan does not permit unlocking of pension money to alleviate financial hardship.
What happens to the money in my LIRA if I die?
Your spouse must be named as the beneficiary of your LIRA. Your
spouse has the option to receive the balance remaining in your
LIRA as a lump sum payment. Your spouse could also purchase a life
annuity, transfer money to a prescribed RRIF or transfer money to
a LIRA and purchase a pension at a later date.
Your spouse may waive his or her designated beneficiary status by
signing a waiver. The waiver must be completed and filed with the
financial institution that administers your LIRA before your date
of death. Please note that your spouse may revoke the waiver at
any time before your date of death by providing notice in writing
to the financial institution administering your LIRA.
If you have no spouse, the money will be paid as a lump sum to
your named beneficiary. If there is no named beneficiary the
money will be paid as a lump sum to your estate.
If you have a LIRA because you are the surviving
spouse of a deceased plan member or if you have a LIRA as a result
of a division on spousal relationship breakdown you are not
required to name your new spouse as the beneficiary of your LIRA
because you are not the original plan member.
Can I use the money in my LIRA for the Home Buyers’
Plan permitted by the Income Tax Act?
No. While the Income Tax Act encourages the
repayment of the amount borrowed from your RRSP to purchase a home, repayment is not
required. In effect, your LIRA could be unlocked.
Where can I find a LIRA?
A wide variety of financial institutions, such as banks,
trust companies, credit unions, insurance companies and brokerage firms, offer the
product. The Pension Division does not maintain a list of issuers.
Can my LIRA be seized by my creditors?
No. The money in a LIRA is exempt from execution, seizure
or attachment. Also, you may not assign the money.
However, a LIRA could be subject to a division on spousal
relationship breakdown pursuant to The Family Property Act.
As well, the LIRA could be subject to attachment for purposes of enforcing a maintenance
order pursuant to The
Enforcement of Maintenance Orders Act.
Can I transfer assets to my LIRA from an
ordinary RRSP or RRIF?
Pension legislation now
permits,
but does not require, a LIRA contract to accept
assets that are not locked-in.
This would allow you to transfer assets held in an
ordinary RRSP or RRIF to your LIRA.
However, once non-locked-in assets are transferred
to a LIRA contract they are subject to the plan rules governing
the
contract
and applicable legislation.
Is my LIRA guaranteed or protected from loss?
Your LIRA is not insured or guaranteed by the Government of
Saskatchewan. Your pension assets could decline due to poor investment performance.
Some of the products in which you are invested might be
guaranteed. For example, deposits at banks, trust companies and credit unions are backed
by insurance schemes.
