The Financial Services Commission of Ontario has published a policy governing Ontario Locked-In Retirement Income Funds.

FSCO notes that pension legislation provides that a former member of a pension plan who is entitled to a deferred pension, is entitled to require the administrator to pay an amount equal to the commuted value of the deferred pension into a prescribed retirement savings arrangement (such as an Ontario Locked-In Retirement Income Fund).

The LRIF is a Registered Retirement Income Fund under the Income Tax Act that is designed with additional requirements under the legislation to hold and distribute locked-in pension funds. The regulations were amended in March 2000 to provide for the LRIF, which was intended to provide an alternative retirement income vehicle to the Ontario Life Income Fund, or LIF.

The policy notes that there are some key differences between the LRIF and the LIF, such as: the maximum annual income amount that can be paid from the LRIF each year is generally based on its investment earnings in the previous year; there is no requirement under the LRIF for the purchase of a life annuity by age 80; and, where an LRIF owner is not paid the maximum amount he or she is entitled to be paid in a particular year, the unused amount may be carried forward to future years.