Approaching Retirement: A Personal Journal 2

Deciding What to Do with My Defined Contribution Pension Plan

 

If you know me personally or have read the “About Russ” section on the Money Architect website, you will know that I spent many years in church-related ministries. What is now known as Mennonite Church Canada operates a defined contribution (DC) pension plan for its staff and for the staff of affiliated congregations.

 

I ceased working as a pastor in London, Ontario in 2005. As you may know, when you leave employment with an organization that provides a DC pension, you have several choices. In part, these choices depend on your age in relation to your “normal retirement age,” which was 65 in my case. I was 46 in 2005. Two of the choices I considered were to leave it in the pension or transfer it to a Locked-In Retirement Account (LIRA).

 

For context, the broader range of options generally available to me at age 46 looked like this:

 

Destination	Generally available at 46	Comment
Leave in former employer’s DC plan	Yes, if plan permits	My “terminated member” arrangement
Locked-In Retirement Account (LIRA)	Yes	Normal locked-in transfer
New employer’s Registered Pension Plan (RPP)	Yes	If the receiving plan accepts transfers
Life Income Fund (LIF)	No	At 46, I was still 9 years from age 55, the earliest retirement age
Deferred life annuity	Potentially Yes	If the plan permitted it; payments could not begin before the earliest retirement age (55)
Immediate life annuity	No	Payments could not begin before the earliest retirement age (55)

 

I chose to leave the funds in the pension plan as a “terminated member.” Here I am, 21 years later, and it is now time to do something with those accumulated investments. I considered two options.

 

1. Purchase an Annuity

Annuities can be very useful financial instruments. In the world of pensions, they can be used to convert the accumulated value of a DC pension into a guaranteed stream of income for life. In that respect, an annuity can provide one of the key elements of a Defined Benefit (DB) pension: predictable lifetime income.

 

I already have a DB plan from my Direct Investing employment days that has been paying out since the fall of 2019, so the purchase of an annuity using my DC plan would have been to supplement that already established stream of income.

 

Ultimately, I chose not to purchase an annuity. The quotes I received simply didn’t offer enough income to persuade me that an annuity was the way to go.

 

2. Transfer to a Life Income Fund (LIF)

The other option I considered was transferring the pension to a Life Income Fund (LIF). A LIF is the locked-in version of a RRIF or Registered Retirement Income Fund. While a RRIF is funded with assets from a Registered Retirement Savings Plan (RRSP), a LIF is funded from pension assets.

 

The plan administrator for my DC pension is the Group Savings and Retirement division of iA Financial Group. Initially, they sent me an options form, but when I called back to let them know that I was planning to transfer it out of iA, they simply documented that information over the phone and that part was taken care of.

 

On the receiving side, as with my other investment accounts, I used TD Direct Investing. I needed to go to a local TD Canada Trust branch to open a locked-in account, so my wife and I made an appointment to do so. Because Ontario pension law gives spouses certain rights, TD required my wife’s written consent; in our case, that meant she came to the branch with me.

 

In addition to the account opening, I also completed TD’s transfer paperwork and a CRA Form T2151 that allows for the direct transfer of the pension funds to a LIF.

 

Remarkably, the next day I received an email confirming that the account was open, and the day after that I learned that the transfer request had been sent to iA Financial Group. The downside is that the transfer itself is expected to take up to 30 days to complete. One might well wonder why it should take that long, especially since the funds at iA are proprietary and will need to be sold before being transferred as cash.

 

That’s fine, though. The main thing is that it gets done this year. One reason is that I want the required annual withdrawals from the LIF to begin in 2027, so that some of the money we have spent all these years accumulating will actually start coming back into our hands.

 

There is probably a bit of psychology involved here as well. After decades of saving for retirement, I now find myself deliberately putting arrangements in place that will force me to withdraw at least the annual minimum and eventually spend some of that money. Perhaps I am playing a small mental game with myself, but there is a purpose to it. We saved this money for retirement, and retirement is almost here.

 

Unlock 50% to My RRIF

In Ontario, a LIF owner may choose to unlock up to 50% of the money transferred into the LIF and transfer that unlocked portion into an RRSP or RRIF. However, you only have 60 days from the date that the transferred funds land in the account to make that transfer. I’m not at that stage since the money hasn’t left iA yet, but I intend to do this. The main rationale for doing this is to lessen the restrictions on withdrawing from a LIF. Beginning in the year after they are established, both the RRIF and the LIF have certain annual minimums that are required to be paid out each year based on age and the value of the account, but a LIF also imposes a maximum. Unlocking 50% into my RRIF will limit the impact of that inflexibility.

 

In Ontario, the form I will need to do the unlocking is Form 5.2 – Application to withdraw or transfer up to 50% of the money transferred into a Schedule 1.1 LIF. I will give this to TD Direct Investing along with any other documentation they require.

 

My own pension is governed by Ontario legislation, but one thing I was reminded of while going through this process is that pension jurisdictions across Canada take different approaches to unlocking, including the circumstances in which unlocking is permitted. For readers elsewhere in the country, I have summarized the general approaches in the table below.

 

Pension Jurisdiction	General Unlocking/Access at Retirement	Other Unlocking Provisions
British Columbia	No general unlocking. LIF remains subject to annual maximum.	Financial hardship, small balance, non-residency, shortened life expectancy.
Alberta	Up to 50% may be unlocked, generally at age 50+, when establishing retirement income arrangements	Financial hardship, small balance, non-residency, shortened life expectancy.
Saskatchewan	Essentially 100% access. At retirement eligibility, funds may be transferred to a prescribed RRIF with no maximum withdrawal.	Financial hardship, small balance, non-residency, shortened life expectancy.
Manitoba	Up to 50% at 55+; 100% unlocking at 65+.	Financial hardship, small balance at 55+, non-residency, shortened life expectancy.
Ontario	Up to 50%, normally through a new Schedule 1.1 LIF.	Financial hardship, small balance, non-residency, shortened life expectancy, and certain tax-related excess amounts.
Québec	Essentially 100% access from a LIF at 55+. Since 2025 there is no maximum LIF withdrawal at that age.	Special provisions apply before 55, including temporary-income rules.
New Brunswick	Limited partial unlocking. Once in a lifetime, a portion of a LIF may be transferred to a RRIF.	Small balance, shortened life expectancy and certain non-residency provisions.
Nova Scotia	Up to 50% at 55+, through the newer LIF rules effective April 2025.	Financial hardship, small balance, non-residency, shortened life expectancy.
Newfoundland & Labrador	No general percentage unlocking. LIF maximum continues to apply.	Financial hardship, small balance, non-residency, shortened life expectancy.
Prince Edward Island	No general provincial pension-standards legislation, so there is no comparable PEI LIRA/LIF unlocking regime.	Depends on the particular plan and applicable legislation.
Federal / Yukon / Northwest Territories / Nunavut*	Up to 50% at 55+, using a Restricted LIF (RLIF). The one-time election may transfer up to 50% to an RRSP or RRIF.	Financial hardship, small balance at 55+, non-residency and shortened life expectancy.

* Federal pension legislation generally applies to employment and pension plans in Yukon, the Northwest Territories and Nunavut, including local and private undertakings. Certain territorial or public-sector plans may be governed by separate legislation.

 

If any of these details about unlocking are relevant to you, please check with your pension plan administrator to verify whether the rules apply in your circumstances.

 

That brings you up to date on this part of my retirement transition. My wife is working through some similar decisions as she approaches retirement herself. None of these steps is especially dramatic, but I am finding that this is what approaching retirement actually looks like: a series of relatively small decisions, each involving its own choices, paperwork and deadlines.

 

 

This is the 317th blog post for Russ Writes, first published on 2026-09-14.

 

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Disclaimer: This blog post is intended for general information and discussion purposes only. It should not be relied upon for investment, insurance, tax, or legal decisions.