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Retirement Savings and Income Vehicles—Make an Informed Choice!

Plans to Help You Save for Retirement

Employer-Sponsored Private Pension Plans

You'll find all the information you need on this type of plan in the capsule Private Pension Plans.

Individual and Spousal Registered Retirement Savings Plans (RRSPs)

You'll find all the information you need on this type of plan in the capsule Everything You Need to Know About RRSPs.

Locked-In Registered Retirement Savings Plans

Locked-in RRSPs are a type of RRSP account to which you can only transfer funds from a supplemental pension plan. The term "locked-in" means the amounts invested can only be used to provide a retirement pension. The following conditions also apply:      

  • You must convert the funds invested in your locked-in RRSP into a retirement income vehicle by December 31 of the year you turn 71.
  • The regulatory agency that oversees your supplemental pension plan may have certain restrictions as to the locked-in RRSPs to which you can transfer funds. If you're subject to Québec law (Supplemental Pension Plans Act), the vehicle offered to you will be a locked-in retirement account (LIRA).

Locked-in Retirement Accounts

LIRAs first became available in 1991. They are similar to locked-in RRSPs, and funds can only be transferred from:

  • Another LIRA
  • A life income fund (LIF)
  • A supplemental pension plan (SPP)
  • An annuity contract made up of funds transferred from a supplemental pension plan

More about LIRAs

  • You can withdraw funds from your LIRA in whole or in part if you provide your financial institution with a medical certificate attesting to a physical or mental disability that reduces your life expectancy.
  • You must convert the funds invested in your LIRA by December 31 of the year you turn 71.

You can transfer funds from a supplemental pension plan to a LIRA if they're not locked in. After the transfer, however, the funds are locked in.

Main Vehicles Used to Draw a Retirement Income

Registered Retirement Income Funds (RRIFs)

An RRIF is another option that can provide a retirement income. Only amounts accumulated in the following vehicles can be transferred to an RRIF:

  • An individual or group RRSP
  • A supplemental pension plan
  • Another RRIF
  • A portion of a life income fund, subject to some restrictions

RRIFs allow you to progressively withdraw funds each year according to the minimum prescribed by tax law. There is no ceiling on withdrawals.

More about RRIFs

  • RRIF withdrawals are taxable, according to certain rules.
  • They may be self-directed. The rules are generally the same as for self-directed RRSPs.
  • Some conditions may apply to RRIFs to which you can transfer locked-in sums originating in a supplemental pension plan, depending on the regulatory agency that monitors them. If you're subject to Québec law (Supplemental Pension Plans Act), the vehicle available to you is a life income fund (LIF).
  • You can not contribute to an RRIF in your spouse's name. What is commonly known as a "spousal RRIF" is actually an RRIF converted from a spousal RRSP.

Life Income Funds

An LIF is a specific type of RRIF that can be funded only by savings transferred from:

    • Another LIF
    • An LIRA
    • A supplemental pension plan
    • An annuity contract made up of funds transferred from a supplemental pension plan

More About LIFs

  • Funds from an LIF can provide two types of income: a life income or, under certain conditions, a temporary income
  • A life income is a source of retirement income; you can draw from your LIF every year until you die.
  • You must withdraw the minimum prescribed by tax law (like with an RRIF). However, since the savings in your LIF will have to sustain you for the rest of your life, there is also a ceiling on how much you can withdraw per year, which may change annually. Despite the ceiling, an LIF can run out before you die.
  • Since 1998, an additional LIF income has been available, called a temporary income. However, your LIF must offer this option, and you have to apply to your financial institution every year. For 2024, temporary incomes cannot exceed $27 400.
  • LIF withdrawals are taxable, according to certain rules.

Annuities Purchased from an Insurer

For a certain amount, an insurer can guarantee you a pension, beginning immediately or at a later date. What you should know:

  • A number of options may be available, such as with regard to death benefits and guarantees.
  • If the funds you want to use to guarantee the annuity are locked-in, the options may be more limited. For example, you will not be able to take out a fixed-term annuity (also called an annuity certain).
  • Annuity benefits are taxable.
  • A life annuity can be purchased only from an insurance company.
  • A fixed-term annuity can be purchased from an insurance company or other financial institutions.

Pension Drawn Directly from a Supplemental Pension Plan

If you have a defined benefit pension plan and are within 10 years of the normal retirement age set out in your plan, your only option may be to draw a pension directly from the plan.

This pension can take a variety of forms, such as a 0, 5, or 10 year guaranteed income or a survivor annuity for you spouse after your death (a pension of equal or lesser value than the amount you were receiving before you died).

Worth knowing about...

  • With the exception of employer-sponsored private pension plans, retirement savings and income vehicles are available at most financial institutions in Québec (banks, trust companies, insurance companies, caisses Desjardins, etc.).
  • For more information on RRSPs or RRIFs, see the Canada Revenue Agency (CRA) Web site at www.cra.gc.ca This link will open in a new window., in the section "Individuals – Registered Savings Plans", or ask your financial institution.
  • The Income Tax Act makes no restrictions for locking in RRSPs or RRIFs. CRA's approval is not required to cancel a locked-in account. If you have questions, contact the regulatory agency that oversees your pension plan. If you're subject to Québec law (Supplemental Pension Plans Act), the regulatory agency is Retraite Québec.
  • LIRAs and LIFs are subject to the Income Tax Act as well as the Québec Supplemental Pension Plans Act and are therefore overseen by Retraite Québec. More information and a list of institutions that offer LIRAs and LIFs are available at www.retraitequebec.gouv.qc.ca under "Programs - Supplemental pension plans" or from your financial institution.
  • If you're 65 or over, you can withdraw some or all of your LIRA or LIF as long as the total amount saved in the retirement savings vehicles listed below does not exceed 40% of the maximum pensionable earnings in the year you apply. In 2024, the maximum is $27 400. This applies to:
    • LIRAs
    • LIFs
    • Locked-in RRSPs
    • Defined contribution pension plans (or the defined contribution component of your supplemental pension plan)
  • At some financial institutions, if both parties (the institution and the client) agree to lock in an investment for a specific period at the time of purchase, the investment is called a "locked-in RRSP." However, since the funds are not from an actual pension plan, they can be used for other purposes than as a retirement income.
  • When purchasing an annuity from an insurer, it's best to shop around since amounts can vary widely from one company to the next. It's also important to make sure the company is stable and offers first-rate service.

Other useful information