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Applicable laws for LIRAs and LIFs

Locked-in retirement accounts (LIRAs) and life income funds (LIFs) are subject to a specific law and the Income Tax Act.

Specific law

The specific law that applies to LIRAs or LIFs is

  • the law that governed the benefits of members when they ceased active plan membership;
  • or the law specified in the law that governed the benefits of members when they ceased active plan membership (see Example 5 and Example 6).

If you do not know which law applies, you can find out by

  • asking the pension plan administrator
  • following the steps below, which take into account the activities of the member's employer.

Steps for determining the law

The law that governed the benefits of members when they ceased active plan membership and that determines the specific law applicable to LIRAs or LIFs is either a federal or provincial law.

To determine whether a federal or provincial law applies, it must be determined whether the employer's activities fall under federal or provincial jurisdiction.

Do not rely on:

  • the company's charter (federal or provincial);
  • the location of the company's head office;
  • the member's place of residence;
  • the province where the pension plan is registered.

Employers whose activities are under federal jurisdiction

Where an employer's activities are under federal jurisdiction, the applicable law for LIRAs (called locked-in registered retirement savings plans (RRSPs)) or LIFs is the Pension Benefits Standards Act, 1985 This link will open in a new window.. The Office of the Superintendent of Financial Institutions Canada This link will open in a new window. is responsible for this federal law.

Employers whose activities fall under federal jurisdiction include, for example, banks, interprovincial transport and telecommunications companies, federal public departments or agencies, etc.

Employers whose activities are under provincial jurisdiction

Where an employer's activities are not under federal jurisdiction, they are under provincial jurisdiction. Once that is established, the relevant province must then be determined.

The applicable law is the law of the province in which the member worked when he or she ceased active plan membership. It is the province in which the employer's establishment is located and where the active member must report for work or from which the member receives his or her remuneration.

If the province is Québec, the specific applicable law for LIRAs or LIFs is the Supplemental Pension Plans Act, which is administered by Retraite Québec.

For the other provinces or territories in Canada, consult the applicable laws and monitoring agencies responsible for those laws.

Employers whose activities are under provincial jurisdiction include, for example, caisses populaires, trust companies, construction companies, wholesale or retail companies, companies providing lodging or food services, municipalities, universities, early childhood centres (CPEs), public provincial departments or agencies, etc.

Examples

Louise worked at a grocery store in Montréal and was a member of the company's pension plan. When the plan was terminated because of the company's bankruptcy, Louise transferred her benefits under the plan to an LIRA. When she retired, she transferred the amounts from her LIRA to an LIF with another financial institution. Since that institution did not have information on the specific applicable law, it indicated that the LIF was under federal jurisdiction, which was incorrect. The financial institution had to correct the information and specify that the law that applies in Québec to Louise's LIFs is the Supplemental Pension Plans Act. This is because grocery stores are under provincial jurisdiction and Louise worked in Québec when she ceased active plan membership.

Michael lives in Ottawa. He worked at a large retailer in Gatineau and was a member of the company's pension plan. The plan is registered in Ontario. Since the store's activities are under provincial jurisdiction and Michael worked in Québec, his benefits under the plan are subject to Québec law, which is the Supplemental Pension Plans Act. When his employment ended, Michael transferred his benefits to an LIF, which is also subject to Québec law. The fact that Michael lives in Ontario or that the plan is registered in Ontario has no impact on the law that applies to his LIF.

Justine worked for a bank in Gatineau as a financial planner. When her employment ended, she transferred her benefits under the bank's pension plan to an LIRA (a locked-in RRSP). The LIRA is subject to federal law because banks are under federal jurisdiction. The law that applies to LIRAs is therefore the Pension Benefits Standards Act, 1985. That Act governed Justine's benefits under the plan when her employment ended.

Jean lives in Caraquet and worked for a caisse populaire in that town. She was a member of the caisse's pension plan, which is registered in Québec. Since caisse activities are under provincial jurisdiction and Jean worked in New Brunswick, her benefits under the plan were subject to New Brunswick law, which is the Pension Benefits Act. When her employment ended, she transferred her benefits to an LIRA, which is subject to the same New Brunswick law. The fact that Jean lives in New Brunswick or that the plan is registered in Québec has no impact on the law that applies to her LIRA.

Alan worked for the Québec public service and was a member of the Government and Public Employees Retirement Plan (RREGOP). He ended his employment and transferred his benefits under RREGOP to an LIRA, which is subject to Québec law, that is, the Supplemental Pension Plans Act. The law that applies to Alan's benefits when he ceases active plan membership is the Act respecting the Government and Public Employees Retirement Plan. Under that Act, the authorized LIRA corresponds to the one set out in the Regulation respecting supplemental pension plans, which comesunder theSupplemental Pension Plans Act.

Julie worked at a hotel in Sherbrooke and was a member of the company's VRSP. She ended her employment and transferred the balance of her locked-in VRSP account to an LIF, which is subject to Québec law, that is, the Supplemental Pension Plans Act. The law that applies to Julie's benefits when she ceases active plan membership is the Voluntary Retirement Savings Plans Act and, under that Act, the authorized LIF corresponds to the one set out in the Regulation respecting supplemental pension plans, which comes under the Supplemental Pension Plans Act.

Income Tax Act

LIRAs and LIFs are also subject to the Income Tax Act This link will open in a new window.. The agency responsible for the administration of the Act is the Canada Revenue Agency This link will open in a new window..

LIRAs and LIFs must meet the tax requirements that apply respectively to a registered retirement savings plan (RRSP) and a registered retirement income fund (RRIF).

Legal references

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