Income and tax-sheltered growth
If you left a job where you had a pension plan, you may have transferred your pension entitlement to a locked-in retirement account (LIRA) or locked-in RRSP, where it has been invested according to your directions. Typically, that money cannot be withdrawn until you start retirement.
After a minimum age (set by your province) you can start to receive income from this pension money by converting it into a LIF or LRIF/RLIF or buying a life annuity. (Depending on your province, you may have a choice between the 2 types of accounts. As well, there may be different rules affecting these accounts.)
In many ways a LIF/LRIF/RLIF works like a LIRA or locked-in RRSP in reverse: Instead of putting money in, you take an income out. While there are rules governing minimum and maximum withdrawals every year, a LIF/LRIF/RLIF keeps you in control of how your money is invested, letting you choose from:
- Insurance GICs
- Mutual funds
- Segregated fund contracts
- Other options that reflect your risk tolerance and your overall financial plan