A Life Income Fund is a locked-in investment savings account that is designed to provide retirement income. LIFs are considered an extension of Locked In Retirement Accounts as the periodic payments that are generally paid out came to be from locked-in pension funds. A Life Income Fund can be either provincial or federal depending on where the locked-in pension funds originated from. Pension funds can be registered either federally or provincially. Federally registered pension funds typically originate from chartered banks, radio, television, transportation and crown corporations Employees from these sectors would have to open a Federal Life Income Fund.

Example: Joe was employed by CIBC for 20 years. At 40 years old, Joe left CIBC to work with another company. The pension that Joe accumulated at CIBC had to first be moved into a Locked In Retirement Account (LIRA), Federal jurisdiction. Currently Joe is 65 and looking to retire, he wants to access the funds in his LIRA and decided to convert his LIRA to a LIF in order to generate income. Joe will open a federal LIF. Keep in mind that the age to convert your LIRA to a LIF vary province by province.

Opening a Life Income Fund

A Life Income Fund can be federal or provincial. They’re not available in all provinces of Canada and rules and regulations vary from province to province.

You may open a LIF in Alberta, British Columbia, New Brunswick, Nova Scotia, Newfoundland & Labrador, Ontario, Quebec. There is no LIF offered in PEI or Northwest Territories. Newfoundland also offers a Locked-In Retirement Income Fund (LRIF)

In Saskatchewan and Manitoba, you may open a Prescribed Registered Retirement Income Fund (PRIF) also known as a variable benefit account. These don’t limit the amount that you may withdraw.

In terms of Federal legislation, you may open a Life Income Fund or an Restricted Life Income Fund (RLIF) which would allow you to do a one-time 50% unlocking and move the funds into an RRSP or a RRIF.

In certain provinces, you may be required to convert your LIF into an annuity at age 80. You may either be opening a LIF for the purpose of generating an income stream or for the purpose of unlocking 50% of your locked-in pension.

Life Income Fund
Funds in a Life Income Fund typically originate when an employee leaves their employer and the pension that comes with at has to go into a locked-in account.

Creditor Protection

When you open a Life Income Fund, you can be comfortable of the thought that they can’t be accessed by creditors, however, keep in mind that under certain circumstances such as marriage breakdown, locked-in plans may have to be split with your spouse or common law partner.

Naming a Beneficiary

The beneficiary can be your spouse/common law partner, estate or another individual. If you wish to name a beneficiary someone other than your spouse or common law partner, they must complete a waiver and give up their right to your locked-in funds. If you don’t have a spouse, then you can designate a beneficiary of your choosing.

Age Limit

Most provinces have a minimum age limit of 55 in order to open a Life Income Fund but rules vary from province to province. For Alberta, Quebec and New Brunswick, there is no age limit. However, at the end of the year you turn 71, it is mandatory for you to convert your Locked In Retirement Account (LIRA) or Locked In RRSP to a Life Income Fund (LIF) for the purpose of distributing income.

RRIFs vs LIF

Life Income Fund and Registered Retirement Income Fund are very similar in nature as they aim to provide a stream of income in retirement. Both have yearly and annual minimum withdrawals. However, RRIFs are established by converting an RRSP while LIFs can only be established with funds transferred from a LIRA, a Locked-In RRSP, a eligible life annuity or a eligible pension plan such as a Defined Contribution Plan. LIFs also have an annual maximum withdrawal.

Withdrawing from a Life Income Fund

Minimum Withdrawals

Life Income Funds have minimum and maximum withdrawal percentage. The percentages vary from province to province. Funds withdrawn from a Life Income Fund will generate a T4-RIF tax slip and you would have to declare them on your income. Tax would be paid at your marginal tax rate.

Depending on the province, you may use your spouse’s age to calculate the minimum withdrawal. This applies under all provinces except for New Brunswick. Note that for Quebec and Nova Scotia, the spouse has to be younger than you and this decision cannot be reversed.

Minimum Withdrawal Rate

Age At Start Of YearLIF minimum withdrawal percentage
654.00%
664.17%
674.35%
684.55%
694.76%
705.00%
715.28%
725.40%
735.53%
745.67%
755.82%
765.98%
776.17%
786.36%
796.58%
806.82%
817.08%
827.38%
837.71%
848.08%
858.51%
868.99%
879.55%
8810.21%
8910.99%
9011.92%
9113.06%
9214.49%
9316.34%
9418.79%
95 and older20.00%

The formula used to calculate the minimum withdrawal percentage is 1 ÷ (90 – Your Current Age)

Maximum Withdrawal Rate

The maximum withdrawal rate various across provinces and is based on your age and the CANSIM rate, also known as an interest rate factor. You may not use the spouse’s age for the maximum withdrawal. CANSIM stands for Canadian Socio-Economic Information Management. According to Government of Canada, the CANSIM rate is set monthly and is based on that month’s average rate for long term Government of Canada bonds. To determine your maximum withdrawal rate, it’s advisable to contact your financial institution.

Withdrawing Above the Maximum Amount

If you’re looking to withdraw above the maximum amount of your LIF, you may have to complete applicable forms and meet certain requirements that vary province by province. As each province differs in terms of criteria, we’ve listed below common themes that you may withdraw above the maximum for. Depending on the jurisdiction that the LIF is registered in, funds can be access via

  • Financial Hardship
  • Non-Financial Hardship.

Manitoba and Saskatchewan have Prescribed Registered Retirement Income Fund (PRIF) which don’t limit the amount that may be withdrawn.

Financial Hardship Jurisdictions
Low Expected Income  

Individuals can complete one unlocking
application per year for low expected
income. Spousal consent would be needed.
Federal
Ontario
British Columbia
Alberta
Nova Scotia  
Rent/Mortgage in Arrears

Individuals behind on their mortgage
payments could request to access their
locked in funds.
Ontario
British Columbia
Alberta
Nova Scotia  
First and Last Month’s Rent & Security Deposit

If you’re looking to secure a place to live,
you may access your locked in funds by completing applicable forms.
Ontario
Alberta
British Columbia  
Medical & Disability Costs

The account holder may request a one
time unlocking in order to cover medical
costs. A doctor’s note must accompany the unlocking documents.
Federal
Alberta
Ontario
Nova Scotia  
Non-Financial Hardship Jurisdictions
Small Balance Unlocking
(Restricted by Age & Amount in
Certain Provinces)


Small Balance refers to accounts
whose total value is less than a certain
percentage of the YMPE. For example,
in Ontario, you must be at least 55 years old
and the value of the account must be less than 40% of the YMPE.
Federal
Alberta
British Columbia
Ontario
Manitoba
Saskatchewan
Nova Scotia
Quebec  
50% Unlocking
(Restricted by Age in Certain Provinces)


You may unlock 50% of the value of your
LIF/RLIF by completing the applicable provincial/federal forms. Once unlocked,
you may transfer these funds into
an RRSP or a RRIF, depending on
the province.
Federal
Ontario
Alberta
Manitoba    
Shortened Life Expectancy

You may unlock your funds if your life
expectancy has been shortened due to a
terminal illness. For example, in
Ontario, you may withdraw from
your account if your life expectancy
has been shortened to 2 years or less.
You would need a doctors note and spousal consent.
Federal
Alberta
British Columbia
Ontario
Quebec
Manitoba
Saskatchewan
Nova Scotia
New Brunswick  
Non-Residency

If you’re a non-resident of Canada and
have been so for more than 2 years,
you may unlock your funds pending that
you’ve received a confirmation letter from the CRA.
Federal
Alberta
British Columbia
Ontario
Quebec
Manitoba
Saskatchewan
Nova Scotia

Keep in mind that certain categories allow you to unlock your locked-in accounts once per year. However, if you qualify under different categories, you are allowed to unlock more than once a year, pending it’s a different category.

If you’re thinking about accessing your funds in your LIF, contact your financial advisor for help to determine what jurisdiction your LIF falls under and what are your options are.

Tax on Withdrawals

Keep in mind that income from a Life Income Fund such as withdrawals is taxable and added to your annual income. If you’re withdrawing more than a minimum, depending on the province, withholding tax would apply. The minimum withdrawal is not subject to withholding tax.

Withdrawal AmountUp to $5,000Between $5,000 and up to $15,000Over $15,000
Tax Rate withheld for Canadian residents10%20%30% 
Tax Rate withheld for the province of Quebec5% 10%15% 

Frequency of LIF Payments

One of the decisions individuals have to make is how frequent they wish to have the minimum Life Income Fund payment sent to them. The options are:

  • Monthly
  • Quarterly
  • Semi-Annually
  • Annually

Each individuals circumstances are unique and you would choose a frequency that would meet your needs.

Marriage Breakdown

If you and your spouse are going through a separation or a divorce, then the funds accumulated in the Life Income Fund would have to be split evenly or in accordance with court proceedings. The amount would have to be transferred to the other’s spouse’s locked in account which would have to be in the same jurisdiction. A transfer such as this would not generate any tax consequences and the transfer form, Breakdown of Marriage or Common Law Partnership must be used.

Tax Issues at Death

One of the most important things you could do is naming a qualifying beneficiary on your LIF. A qualifying beneficiary would be

  • spouse/common law partner
  • financially dependent child
  • financially dependent child with mental or physical disability

By naming a qualifying beneficiary, upon your death, the funds in the plan can be transferred into a locked-in plan, a registered plan or may be used to purchase an annuity on a tax deferred basis.

If the beneficiary is listed as estate or a non-qualifying beneficiary, then the funds accumulated in the locked-in plan would be taxable on your final return.

Each provincial jurisdiction is different but upon your death, depending on the province, funds can stay locked-in and be transferred to your spouse. When the beneficiary is someone other than your spouse, the funds would become unlocked. Each province deals differently with their locked-in account legislation which is why it’s important to visit your provincial pension regulators’ website.

Provincial Pension Regulators

FederalOffice of the Superintendent of Financial Institutions
Alberta – Alberta Finance Pensions
British ColumbiaBC Financial Services Authority
ManitobaManitoba Pension Commission
OntarioFinancial Services Commission of Ontario
QuebecRetraite Quebec
New BrunswickFinancial and Consumer Services Commission
Newfoundland & LabradorService NL
Prince Edward Island – No Provincial Legislation
SaskatchewanFinancial and Consumer Affairs Authority
Northwest TerritoriesOffice of the Superintendent of Financial Institutions
YukonOffice of the Superintendent of Financial Institutions
NunavutOffice of the Superintendent of Financial Institutions