Page 141 - A Canuck's Guide to Financial Literacy 2020

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Transfer into a Locked-In Plan

• There are two significant advantages to having your pension benefits locked-in:
▪ You will have a regular income at retirement
▪ Creditors cannot seize locked-in pension money.
• Keep in mind that the money can be accessed if certain exceptions are met

Defined Contribution Options at Retirement

At retirement, members of a defined contribution plan must decide where to transfer the
funds. The plan member would have to decide on how to take income from the accumulated
assets. The choices are limited to locked in options below.

1. Transfer the funds to a locked-in Registered Retirement Income Fund
2. Transfer the funds to a Life Income Fund
3. Use the funds to purchase an annuity

The above options (#1 & #2) encourage the plan member to withdraw a minimum
percentage each year according to their age. Unlike a RRIF, maximum annual withdrawal
limits apply so that the plan member can't deplete their savings.

An annuity would provide the plan member a guaranteed income stream for life (life
annuity) or for a specific period of time. (e.g. up to age 90). The plan member would no
longer have access to their capital and would no longer have to manage their own
investments.