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Lost Your Job? How to Move Your Group RRSP or Workplace Pension to a Self-Directed Account (Canada, 2026)

Why this matters right now

A lot of Canadians are leaving jobs this year, whether through layoffs, buyouts or early retirement. Many of them have years of savings sitting in a group RRSP or a workplace pension run by a big insurance company.

When the job ends, so does the employer match and, often, the group pricing. That's the moment many people move the money into their own self-directed account at a discount broker and start investing it themselves.

Done right, it costs nothing in tax. Done wrong, it can cost a third of the balance.

Step 1: Figure out what you actually have

Your last statement, or the termination letter from the plan provider, will say which of these you hold. They have different rules.

Many employers use a combination, such as a group RRSP for your contributions plus a DPSP for the match. You may need two transfers.

Step 2: Open the right account at your new broker

Before anything moves, open the receiving account:

• Group RRSP or DPSP money → a self-directed RRSP.
• Pension money (DC or DB commuted value) → a self-directed LIRA. Some provinces call it a locked-in RRSP. Pick the LIRA for the same province whose pension law covers your plan; the termination package says which.

Most discount brokers offer both. Questrade, Wealthsimple, and the bank-owned brokerages all do. See how to open a Questrade account or our Questrade vs Wealthsimple comparison.

Step 3: Let the new broker pull the money

This is the most important rule: don't ask the old plan to send you a cheque.

Instead, start a transfer from the new broker's side. They'll have you sign a transfer authorization with your old plan's details. The money then goes institution to institution:

• RRSP to RRSP: handled under the CRA's direct-transfer rules (Form T2033 or the broker's equivalent). No tax, no withholding, no room used.
• DPSP or pension to RRSP/LIRA: usually uses Form T2151, which the plan administrator completes. Pension plans may also have their own transfer forms and spousal waivers.

Insurance-company group plans usually transfer in cash. The plan sells your funds and sends cash, so you'll be out of the market for a few days to a few weeks. That's normal.

Fees: some plans charge a transfer-out fee, often $50 to $150. Questrade says it rebates these up to $150 per account if you send proof within 60 days; other brokers have similar offers. Check current terms before you start.

Step 4: Watch the deadline on your termination letter

Plan providers usually give you a window, often 60 to 90 days, to choose. If you miss it, a default kicks in. That's typically one of:

• your money stays in the plan as a "terminated member," or
• it moves to an individual plan with the same provider, often at higher, retail-level fees.

Neither is a disaster, and you can still transfer later. But the fees on individual insurance plans can be several times what an ETF portfolio costs, so it's worth acting.

Why fees are worth a phone call

Group plan fees vary a lot. Some large employers negotiate excellent pricing. Others pay 1.5% or more a year in fund fees. Here's what a fee difference does to $250,000 over 20 years, assuming 6% returns before fees:

That's roughly $160,000 more for the same market return. Look up the fees on your statement before you decide; if your old plan is already very cheap, there's less reason to rush.

The expensive mistake: cashing out

When you're out of work, a lump-sum withdrawal is tempting. Here's what it really costs.

Withholding tax, taken off the top (outside Quebec):

Quebec has lower federal rates but adds provincial withholding.

But withholding is only a prepayment. The whole amount is added to your income for the year, and your real tax is settled when you file. If you earned a full salary before the layoff, a big withdrawal can be taxed at a higher marginal rate than the 30% withheld, leaving you a bill in April.

And unlike a TFSA, RRSP room you withdraw is gone forever. You can't put it back.

When a withdrawal can make sense

There are real cases where taking some money out is reasonable:

• You've used up EI and your emergency fund and the alternative is credit card debt at 20%+.
• Your income this year is very low, so the withdrawal is taxed at a low rate.

If you do it, take only what you need, in pieces if possible. RRSP withdrawals are not counted as earnings for Employment Insurance, so they generally won't cut your EI cheque, but they are taxable.

What about severance?

Severance (a "retiring allowance" to the CRA) is taxable income. Two ways to shelter it:

1. Use your regular RRSP room. Ask your employer to pay part of it directly into your RRSP. If it's within your room, they can skip withholding tax, and you get the deduction.
2. The pre-1996 rollover. If you worked for the employer before 1996, up to $2,000 per year of that service (plus $1,500 per year before 1989 if you had no vested pension) can go into your RRSP without using room.

Your Notice of Assessment or CRA My Account shows your available room.

After the transfer: now invest it

Once the money lands, it usually arrives as cash. Cash in an RRSP earns very little, so don't leave it there for months.

Our step-by-step guide, How to Invest Your RRSP Yourself, walks through choosing an asset mix and buying your first ETFs.

The bottom line

Leaving a job doesn't mean leaving your retirement savings behind. Group RRSPs and DPSPs can move to your own RRSP, and pension money can move to a LIRA, all tax-free if the new broker pulls it directly. Avoid cashing out unless you truly need the money. Then invest the transfer instead of letting it sit in cash.

This article is educational and not personalized financial or tax advice. Pension and locked-in rules vary by province.

Frequently asked questions