When termination of employment occurs and the participant is not eligible for retirement, he/she has two options:
In almost all cases, a portion is locked in and the remaining assets must be refunded in cash. There is a vehicle tailored to the needs of participants who wish to leave their assets with the RBA, yet receive the cash portion to which they are entitled.
The RBA’s locked-in RRSP is an account where the participant may transfer funds from his/her RBA pension plan. Unlike a conventional RRSP, funds in this type of vehicle are locked in because they will serve as income upon retirement. A participant cannot receive income from a locked-in RRSP. Funds must first be transferred to a LIF or be used to purchase a life annuity.
A former participant may choose the type of investment best suited to him/her; however, the participant alone assumes the risk associated with managing his/her capital.