Pension or LIRA? A decision (redux)

in Pensions, Retirement Savings

One of the few good (read very lucky) decisions I made was to remove my money from the Nortel Pension and put it into a LIRA for holding purposes after I got laid off in 2008, and this post, I wondered (aloud), whether I had made the right decision, but in hindsight it was an astoundingly good decision (i.e. Pension or LIRA ).

Show me the Money?

pension or LIRA
Now that is some Ca$h (thanks to Bank of Canada)

For those who have read for a while, I had to decide about whether to leave my pension in my former employer’s pension fund (which is under funded) or to take a cash settlement and transfer most of the contents into a Locked In Retirement Account (LIRA) (and take the rest as a cash settlement).

I got a lot of advice from different folk about whether I felt confident enough to invest the money wisely enough to mimic or improve on the growth I might get in the Pension fund, however, in the end I just did not trust that my former employer will:

  1. Exist in 5 years
  2. Whomever buys, or takes over them will not replenish the pension fund short fall

So I have decided to take my money out, and move it to a LIRA (and a small part to a TFSA and whatever else I can into my RRSP, thus the pension or LIRA -> LIRA).

I tried to show as much diligence as I could to the documentation that I had to submit, because the default answer if I do not submit my request in time is for the company to keep the money in the (under funded) Pension. I had the Investment Councilor at the bank that set up the LIRA, check over to make sure all the forms had the correct info and then I had Mrs. C8j check everything over as well. No point in making this big a decision and not being careful with the forms.

I mailed the forms using Registered Canada Post delivery, so I have a tracking number and will know when then the forms were delivered as well (can’t be too careful here). Paranoid? Maybe, but again, it would be imprudent to trust regular mail with these forms.

Luckily the forms got there when they did, and I got the money out a few weeks before the Pension announced a large short fall and they started discounting all pensions. As a bit of background info, here is what Nortel’s demise looked like graphically.

pension or LIRA
Graphically, the Death of Nortel


  • Jill January 6, 2017, 4:56 AM

    As employees approach the age of lock-in (age 55 in some situations) they question if they should leave before age 55 and unlock the money and put it in a LIRA. Tough question for a perhaps “gold plated” pensions…but these can fold too…. Not sure what the answer is.

  • Bet Crooks June 14, 2013, 9:51 AM

    I see the cosmic forces of balance are at play. I took the LIRA and should have stayed with the company pension. Ah well, I don’t regret it even though financially I made the wrong choice.

  • My Own Advisor June 13, 2013, 8:22 PM

    Good call on the LIRA.

  • LifeInsuranceCanada.com June 13, 2013, 10:50 AM

    “Investment Councilor at the bank ”

    That’s funny :).

    (I’m feeling particularly sarcastic this a.m.)

    • bigcajunman June 13, 2013, 11:07 AM

      Not sarcastic, as much as my naivete. Luckily he only read the document and didn’t make any guesses as to how I should invest it.

  • Gene December 4, 2008, 9:20 PM

    When I first read your advent calendar, I thought it said Wii, from Nintendo. Unfortunately, it’s a will. Mortality is knocking, Merry Christmas!


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