Canada offers several types of pensions to support you in retirement. The Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) provide retirement income based on your contributions throughout your working life. Employer-sponsored pension plans offer benefits defined by your salary and years of service, while personal pension plans allow self-employed individuals and others to build retirement savings on their terms.

Non-Active RPP
A non-active Registered Pension Plan (RPP) typically refers to a pension plan that is no longer actively receiving contributions from either the employer or the employee. This can occur for several reasons

Termination of Employment
When an employee leaves a job where they were contributing to an employer-sponsored pension plan, they may no longer actively contribute to the plan. Their contributions may be "frozen" or left in the plan until they reach retirement age.

Closure of the Plan
An employer may decide to terminate or close a pension plan, usually because they are replacing it with a different retirement savings option, such as a Defined Contribution (DC) plan.

Retirement
When an employee retires, they may no longer make contributions to their workplace pension plan. They begin to receive pension payments from the plan instead.

Conversion to a Different Retirement Vehicle
Sometimes, individuals choose to transfer their pension funds from an employer-sponsored pension plan into other retirement savings vehicles, such as a Locked-In Retirement Account (LIRA) or a Life Income Fund (LIF).

In the case of non-active RPPs, the accumulated funds are typically preserved and continue to be invested within the pension plan. The plan's administrator is responsible for managing the investments and ensuring that the funds are available for the participant's retirement when they become eligible to receive pension benefits. Regulations governing non-active RPPs can vary by jurisdiction, and there may be restrictions on withdrawing funds or making changes to the plan before retirement age.

LIRA

A Locked-In Retirement Account (LIRA) is a type of retirement savings account available in Canada. It's designed to hold locked-in pension funds that have been transferred from a pension plan, such as a Defined Benefit Pension Plan or a Locked-In Retirement Pension (LRSP), when a person leaves their job or retires.

Here are some key features of a LIRA:

Locked-In Funds

The term "locked-in" means that the funds in a LIRA are subject to specific government regulations and cannot be withdrawn in a lump sum, as you might do with a regular Registered Retirement Savings Plan (RRSP). Instead, the money in a LIRA is intended to provide retirement income.

Investment Options

LIRAs typically offer a range of investment options, similar to an RRSP. Account holders can choose how to invest their funds based on their risk tolerance and retirement goals.

Retirement Income

Once the account holder reaches the eligible retirement age (varies by province), they can convert the LIRA into an income-producing vehicle, such as a Life Income Fund (LIF) or a Locked-In Retirement Income Fund (LRIF). These funds provide a regular stream of income during retirement.

Regulated Withdrawals

The government regulates the annual withdrawal limits from a LIRA, which are typically based on the account holder's age and other factors. These rules ensure that the funds last throughout the retiree's lifetime. In specific cases indivuals are able to "unlock" LIRA accounts under certain criteria (depending on legislation) such as financial hardship, shortened life expectancy and other applicable options.

Portability

LIRA funds are often portable, meaning they can be transferred between financial institutions without triggering taxes or penalties.

Survivor Benefits

In the event of the account holder's death, there are provisions for transferring the remaining LIRA funds to a surviving spouse or beneficiary.

Creditor Protection

LIRA funds are generally protected from creditors in the event of bankruptcy, providing an additional layer of financial security.

It's important to note that the specific rules and regulations governing LIRAs can vary by province in Canada. Individuals with LIRAs should familiarize themselves with the rules and consult with a financial advisor to make informed decisions about managing and accessing their locked-in retirement savings.

LRSP

An LRSP (Locked-In Retirement Savings Plan) and a LIRA (Locked-In Retirement Account)

are similar in that they both hold locked-in pension funds,

but they are subject to different legislative frameworks in Canada.

LRSPs are governed by federal legislation, specifically the Federal Benefits Standards Act (PBSA) and its associated regulations. This means that LRSPs follow uniform rules and regulations across all provinces and territories in Canada that fall under federal jurisdiction.

LIRAs on the other hand, are subject to provincial or territorial legislation. Each province and territory has its own set of rules and regulations governing LIRAs, which can vary from one jurisdiction to another.

The key distinction is that LRSPs are subject to federal laws, providing a consistent framework for individuals with locked-in pension funds across the country. LIRAs, however, have rules that can differ depending on where you live in Canada.

It's essential for individuals to be aware of the specific regulations that apply to their locked-in retirement accounts based on whether it's an LRSP or a LIRA and the province or territory in which they reside. Consulting with a financial advisor who understands the regulations in your jurisdiction is advisable to make informed decisions regarding these accounts.

LIF

Life Income Fund (LIF) has been converted from a former Registered Pension Plan (RPP), Locked-In Retirement Account (LIRA), or Locked-In Retirement Savings Plan (LRSP), it means that the individual has taken their locked-in pension funds from these accounts and placed them into a LIF. This conversion enables them to receive retirement income while adhering to the specific rules and regulations that govern locked-in funds.