In Canada, a type of registered retirement income fund that is used to hold pension funds, and eventually payout retirement income, is called a Life Income Fund (LIF). The life income fund (LIF) cannot be withdrawn in a lump sum; rather, owners must use the fund in a manner that supports retirement income for their lifetime. Each year's Income Tax Act specifies the minimum and maximum withdrawal amounts for LIF owners, which takes into consideration the LIF fund balance and the owner's annuity factor.

LIF owners are not required to purchase a life annuity, buy may choose to do so at any age. A LIF owner may also choose to transfer funds to another LIF, a locked-in retirement income fund (LRIF) or in certain cases to a locked-in retirement account (LIRA). The financial institution from which the LIF is issued must provide an annual statement to the LIF owner. Based on the annual statement, the LIF owner must specify at the beginning of each fiscal year the amount of income he or she would like to withdraw. This must be within a defined range to ensure the account holds enough funds to provide lifetime income for the LIF owner.

Life Income Fund ("LIF") Maximum Annual Withdrawal

The maximum amount that can be withdrawn each year from a Life Income Fund (a "LIF") varies according to the owner's age, current long-term interest rates and the previous year's investment returns for the fund. The maximum annual withdrawal from a LIF is prescribed by the Pension Benefits Standards Regulation (the "Regulation").

A LIF owner's maximum allowable withdrawal for a calendar year is the greater of the following:

  1. The value of the fund at the start of the year multiplied by the appropriate Factor
  2. The actual investment returns for the preceding year under the same LIF contract
  • You have some control over how much tax is withheld from the payments
  • You can name a beneficiary to receive your money after you die
  • There's a minimum income you're required to take out of the plan every year and a maximum you're allowed to take from your plan. The maximums for LIFs are a bit different than for LRIFs
  • You can use money remaining in a LIF to purchase a secure guaranteed income in a life annuity. Depending on the pension rules in your province, you may be required to do this at a certain age
  • LIFs are available across the country. LRIFs are available in some provinces   


If you leave a job where you had a pension plan, you usually have a choice between leaving the pension money in the pension plan or transferring it to a locked-in retirement account (LIRA) or locked-in RRSP, where it can be invested according to your directions until it's time to retire. Typically, the money is locked-in and cannot be withdrawn until you start retirement.

After a minimum age, set by BC's provincial government, you can start to receive income from this pension money by converting it into a LIF.

How LIF can fit into a financial plan

People who have locked-in pension money invested in a LIRA or a locked-in RSP and want to start to receive an income from it, must roll the money into one of:

(1) a LIF, (2) a LRIF or (3) buy a life annuity

The money received as income from any of these plans should be considered when planning income.

Contact our office to speak with a financial advisor about opening a Life Income Fund account today.