Can a locked-in pension be divided for equalization in Ontario?

A locked-in pension — one with restrictions on early withdrawal because it originates from workplace pension funds — can still be divided as part of equalization in Ontario, but the mechanics depend on the type of plan and its governing legislation.

Provincially regulated pension plans in Ontario are subject to the Pension Benefits Act, which allows a division of pension entitlement upon marriage breakdown through a "family law value" calculation. A portion of the pension can be transferred to a locked-in retirement account (LIRA) for the other spouse, or the pension value can be equalized through other assets.

Federally regulated pension plans (covering federal employees, banks, telecommunications workers, etc.) are governed by the Pension Benefits Standards Act (Canada) and have different but similar rules. The key point is that locked-in status limits what can be done with the funds — they generally cannot be paid out as cash to satisfy equalization — but they can be transferred to another locked-in vehicle.