LIRA Rules Are Changing And It's About Time

For too long, Canadians with Locked-In Retirement Accounts (LIRAs) have faced frustrating restrictions on how and when they can access their own money. But that’s finally starting to shift, and it’s a change worth paying attention to.

My home province of Nova Scotia recently joined a growing list of provinces that allow retirees to unlock a portion of their LIRA when converting it to a Life Income Fund (LIF). And I couldn’t be happier.

Why? Because locking down someone’s savings, often for decades, doesn’t reflect how people actually live, spend, or plan for retirement today.

What Is a LIRA, and Why Is It So Restrictive?

A LIRA is what happens to your pension when you leave an employer. The money is preserved for your retirement, but “locked in”, meaning you can’t touch it until you convert it to a LIF (typically around age 55 or later).

And even then, your withdrawals are capped annually. You’re only allowed to take out what the government says you can, based on a formula that has nothing to do with your actual needs.

It’s the opposite of flexibility, and in some cases, the opposite of good planning.

The Case for Unlocking

When provinces allow unlocking, they let you transfer a percentage of your LIRA into a regular RRSP or RRIF, which gives you:

• More control: Withdraw as needed, not according to outdated max limits
• Better tax planning: Coordinate withdrawals with CPP, OAS, or other income
• Improved early retirement cash flow: Spend more when you want to, not when rules allow it
• Simpler estate planning: RRSPs/RRIFs generally offer more flexibility

For many Canadians, this can make a real difference in their quality of life during retirement, especially in the earlier, more active years.

But Here's the Problem: It's a Patchwork

What you can do with your LIRA depends entirely on the province or territory where your pension originated. And the rules vary wildly:

• Saskatchewan: Allows full 100% unlocking at LIF conversion, arguably the best setup in the country
• Quebec: Still uses LIFs, but has removed the maximum withdrawal limits entirely
• Nova Scotia: Recently began allowing up to 50% unlocking at the time of conversion
• Ontario and Alberta: Also allow up to 50% unlocking
• Manitoba: Staged rules — 50% unlocking at age 55, and 100% unlocking at 65
• Other provinces: May still restrict unlocking entirely unless under financial hardship or other special circumstances

In 2025, this kind of jurisdictional roulette feels outdated. If your neighbour can unlock 100% of their LIRA but you can’t access half of yours, just because your pension was registered in a different province, something isn’t working.

Why We Added LIRA Unlocking to Optiml

With more provinces loosening the rules, we’ve added LIRA unlocking as a new feature inside Optiml.

Now, you can:

• Choose the age at which you convert your LIRA
• Model the allowed unlocking percentage based on your province
• See how unlocked funds move into your RRSP or RRIF
• Analyze how it affects your retirement income, taxes, and flexibility

This lets you compare plans with and without unlocking, and see which gives you more control, better tax outcomes, and improved long-term cash flow.

Final Thought

Protecting pensions made sense decades ago. But today, Canadians are living longer, retiring more gradually, and managing more complex income streams.

We need policies, and planning tools, that reflect that reality.

I’m glad more provinces are moving in the right direction. And if you have a LIRA, it’s absolutely worth understanding your unlocking options. It could mean more flexibility, less tax, and a better retirement plan overall.

Log into Optiml to explore your options and see what unlocking could mean for your future.