Everything you need to know about Life Income Funds: what they are, minimum and maximum withdrawal rules, differences from a RRIF, and strategies for managing locked-in pension money.
A Life Income Fund (LIF) is a registered account that holds locked-in pension money — typically the commuted value from a defined benefit pension plan that was transferred to a Locked-In Retirement Account (LIRA). Like a RRIF, a LIF provides retirement income by allowing withdrawals from the accumulated funds, but with an important difference: there is both a minimum AND a maximum withdrawal limit.
The "lock-in" requirement is because the original source was pension money, which governments mandate be used for retirement income — you can't just cash it out all at once.
DB Pension Commuted Value → LIRA (accumulation) → LIF (income) → Annuity (optional)
You must convert your LIRA to a LIF by December 31 of the year you turn 71 (in most provinces), though you can convert earlier. Conversion is typically done by completing your financial institution's LIF application form and transferring the LIRA balance in-kind.
In some provinces, you can convert only a portion of your LIRA to a LIF and keep the rest in the LIRA — providing flexibility on the timing and amount of locked-in income.
The key feature of the LIF is the dual-limit system:
The same as a RRIF — a percentage of the account balance based on your age (or spouse's age if elected). You must withdraw at least this amount each year. See the RRIF minimum table in our RRIF Calculator.
Unlike a RRIF, a LIF caps how much you can withdraw in any given year. The maximum is set by federal or provincial regulation and is designed to ensure the funds last for life. The maximum percentage is based on a government-prescribed formula using interest rates and your age.
| Age | Approximate Max LIF Withdrawal % (Federal/Most Provinces) |
|---|---|
| 55 | ~6.10% |
| 60 | ~6.51% |
| 65 | ~7.04% |
| 70 | ~7.71% |
| 75 | ~8.65% |
| 80 | ~10.00% |
| 85 | ~12.00% |
| 90+ | ~14%+ |
Maximum LIF percentages are set annually by the government and vary by province and interest rates. These are approximate 2025 figures.
| Feature | LIF | RRIF |
|---|---|---|
| Source of funds | Locked-in pension money (LIRA/commuted value) | RRSP or other registered savings |
| Minimum withdrawal | Yes (same as RRIF) | Yes |
| Maximum withdrawal | Yes — can't exceed the cap | No — can withdraw everything |
| Spousal survivor option | Survivor can continue LIF or receive annuity | Spouse becomes new owner (successor annuitant) |
| Conversion to annuity | Can buy annuity at any time | Can buy annuity at any time |
| Tax treatment | Same — fully taxable | Same — fully taxable |
| Pension income amount (65+) | Yes — qualifies | Yes — qualifies |
Locked-in funds are frustrating for some retirees who need more flexibility. Fortunately, there are several "unlocking" mechanisms:
In Ontario, BC, Manitoba, and other provinces, you may transfer up to 50% of your LIRA or LIF to a regular RRSP/RRIF when you first set up a LIF (typically between ages 55 and 71). This gives you more flexibility with half the funds.
If the total of all your locked-in accounts falls below a certain threshold (approximately $27,280 federally in 2025, varying by province), you may be able to unlock and withdraw the entire balance.
If a doctor certifies your life expectancy is two years or less, you can typically unlock and withdraw all locked-in funds.
If you have been a non-resident of Canada for at least two years, you may unlock locked-in funds (federal jurisdiction plans).
Most provinces allow partial unlocking for specific financial hardship situations (unpaid rent, medical expenses, etc.). The rules vary significantly by province — check your provincial pension legislation.
Because pension legislation is largely provincial in Canada, LIF rules vary by jurisdiction:
| Jurisdiction | Key Features |
|---|---|
| Federal (pension) | LIRA → LIF; 50% one-time unlock option; standard max withdrawals |
| Ontario | 50% one-time transfer to RRSP/RRIF at age 55+; specific hardship unlocking |
| British Columbia | 50% transfer option; age 65 full unlocking; hardship provisions |
| Alberta | Older locked-in accounts may convert to PRIF; flexible unlocking at 50+ |
| Manitoba/Saskatchewan | PRIF available — no maximum withdrawal cap (unlike LIF) |
| Quebec | LIF with specific Quebec rules; can convert to life annuity at 65+ |
At any time, you can use your LIF balance to purchase a life annuity from an insurance company. An annuity eliminates the LIF complexity (minimum/maximum tracking) and provides guaranteed income for life.
Converting to an annuity is particularly attractive when:
Compare annuity options using our guide: Annuity vs RRIF Canada.
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