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Locked-in Account Types

The terms Locked-In Retirement Account (LIRA) and Locked-In Retirement Savings Plan (LRSP) are often used to describe a tax-deferred account holding funds transferred from a pension plan, and often they are used with little regard to their differences. However, there are notable differences between the two locked-in category types, and you should be aware of these important differences. Reading about rules that govern a LIRA will not help you if your account is an LRSP, and vice versa.

If your employer’s pension plan is registered and administered according to the Federal Pension Legislation, then you will be required to open a Locked-In Retirement Savings Plan (LRSP) to receive the transfer of your pension benefits. When you open your LRSP account, the financial institution administering your account will require you to sign an account addendum agreeing that your account will be administered according to the Federal Pension Legislation.

If, on the other hand, your employer’s pension plan is registered and administered according to Provincial Pension Legislation, then you must open a Locked-In Retirement Account (LIRA). When you open your LIRA, you must advise the financial institution administering your account which provincial pension legislation governs your account. The financial institution will then have you sign an account addendum agreeing that your account will be administered according to that province’s pension legislation.

Note: InvestingForMe provides a general discussion concerning the various aspects of Locked-In Retirement Savings Plans (LRSP) governed by Federal Pension Legislation. However, we do not discuss the guidelines for Locked-In Retirement Accounts (LIRA) as each province maintains its own pension legislation and the differences between each province’s pension legislation are numerous. In addition, changes in provincial pension legislation occur independently and sporadically.  For more information on Locked-In Retirement Accounts (LIRA), see our section Link to Pension Websites.

The following jurisdictions use the LRSP structure (Pension Benefit Standards Act) for pension funds:

  •       Federal Pension Legislation
  •       British Columbia Pension Legislation
  •       Yukon
  •       Northwest Territories
  •       Nunavut

The following jurisdictions use the LIRA structure for pension funds:

  •       Alberta Pension Legislation
  •       Saskatchewan Pension Legislation
  •       Manitoba Pension Legislation
  •       Ontario Pension Legislation
  •       Quebec Pension Legislation
  •       Nova Scotia Pension Legislation
  •       Prince Edward Island Pension Legislation
  •       New Brunswick Pension Legislation
  •       Newfoundland Pension Legislation 
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