Life Income Fund

If you left a job where you had a pension plan, you may have transferred your pension entitlement to a locked-in retirement account (LIRA) or locked-in RRSP (LRSP). Typically, that money cannot be withdrawn until you start retirement.

If you hold a Locked-in RSP (LRSP) or a Locked-in Retirement Account (LIRA), it must be converted to a LIF or LRIF no later than the year you turn 71.

A Life Income Fund (LIF) acts as an extension of a LIRA once you retire. With a LIF, you may periodically withdraw from the accumulated savings in your pension fund and receive retirement income as you need it.
The legislation under which your LIF is regulated requires you by law to withdraw a minimum annual amount. The legislation also sets out a maximum withdrawal amount. Withdrawals are considered taxable income.

Click for a chart of the minimum and maximum withdrawal rates for Ontario LIFs from the Financial Services Commission of Ontario:  Maximum              Minimum

A life income fund (LIF) or locked-in retirement income fund (LRIF, RLIF, PRIF) is like a RRIF, but is for money that originally came from a pension plan. The funds are held in either a locked-in retirement account (LIRA) or a locked-in RRSP and then converted to a LIF.
LIFs vary slightly from province to province, and are not available in P.E.I. and the Northwest Territories. Most provinces require you to have reached age 55 before you establish a LIF, but there is no age restriction in New Brunswick, Quebec, and Alberta.

Characteristics and Advantages of a LIF

  • You will not be taxed on your investment income, however you will be taxed on your withdrawal amounts
  • You may periodically withdraw the funds you need within fixed minimum and maximum annual amount limits
  • You receive an income for as long as you live

What’s the difference between a LIF, RLIF and LRIF?

LIRAs and LIFs are provincially regulated. If you have a LIRA, it will be converted to a LIF when you are ready to receive your retirement income.
LRIFs are only available in Newfoundland and Labrador. In Newfoundland and Labrador, LIFs must be converted and used to purchase a life annuity when you turn 80. However, this restriction does not apply to a LRIF.
LRSPs and RLIFs are federally regulated. If you have an LRSP, it will be converted to an RLIF when you are ready to receive your retirement income.
An RLIF is slightly different from a LIF in that it gives you a one-time opportunity to transfer up to 50% of your pension funds into a regular RRSP or RRIF.

For your reference:

LIRA: Locked-in Retirement Account, provincially regulated; is converted into a LIF
LRSP: Locked-in Retirement Savings Plan, federally regulated; is converted into an RLIF
LIF: Life Income Fund, provincially regulated
RLIF: Restricted Life Income Fund, federally regulated
LRIF: Locked-in Retirement Income Fund, only available in Newfoundland and Labrador