What is a Life Income Fund (LIF) in Canada?

What is a Life Income Fund (LIF)?

A Life Income Fund (LIF) is used to create a source of income from the funds you hold in your pension.

Similar to a Registered Retirement Income Fund (RRIF), you cannot contribute to a LIF after you register an account.

You can only receive retirement income from a life income fund.

LIF Withdrawal Rules

LIF withdrawals have minimum and maximum amounts, which depend on your age and the province in which you set up your LIF.

The annual maximum amount of retirement income that you can receive from a LIF is usually calculated based on the fund balance at the start of the year.

The Income Tax Regulations determine the minimum withdrawal limits, while the Pension Benefits Standards Regulations determine the maximum withdrawal limits.

The limits are enforced to ensure that retirees have enough funds in their LIF to sustain them to at least 90 years of age.

Based on some provincial regulations, after you receive the minimum amount for the year, you can use the funds in your LIF to purchase a life annuity when you turn 80 years.

When you receive income from a locked-in income fund, your withdrawals are subject to tax.

The applicable tax rate depends on your total personal income for the year.

Considerations When Using a LIF

Key things to remember when you decide to use a life income fund are:

  • You can continue to grow your money in a LIF by investing in financial assets such as mutual funds, Exchange-traded Funds (ETFs), GICs, Bonds, or other assets that meet your risk tolerance and investment objectives.
  • You do not pay taxes on your investment earnings in a life income fund. You only pay taxes when you make a withdrawal from the LIF.
  • You cannot withdraw money from a LIF above the maximum withdrawal amount. Remember that you must withdraw the minimum LIF amount for the year.


The Life Income Fund (LIF) and the Registered Retirement Income Fund (RRIF) are both similar in that they provide retirement income, however there are a few differences between them.

The LIF is an extension of locked-in pension plans, which you cannot access before you retire.

On the other hand, the RRIF is an extension of your registered retirement savings plan (RRSP), which you contribute to and can withdraw from at any time before retirement.

The life income fund and the registered retirement income fund have minimum withdrawal limits which you must withdraw every year starting from year following account registration.

However, the LIF also has a maximum limit that prevents you from depleting your pension income.

While you cannot withdraw more than the set maximum amount from your LIF, you are allowed to withdraw an amount in excess of the minimum limit from a RRIF.

The financial institution will withhold taxes on the excess withdrawal amount from the RRIF.


If you and your employer contribute to an employer pension plan, you cannot withdraw from this plan when you stop working for that employer.

You have the option to transfer your retirement savings in a pension plan to a locked-in retirement account, also known as a LIRA.

While a locked-in retirement account provides income when you retire, you cannot withdraw money directly from your LIRA.

To receive money from a locked-in retirement account, you need to convert it to a life income fund, also known as a LIF.

Essentially, a LIF is a way to draw income from your locked-in retirement plans, such as the LIRA.

Retired couple sitting on dock

Frequently Asked Questions

  • Can you convert a LIF back to a LIRA?
  • When can you start withdrawing from a LIF?
Adeola Ojierenem

Adeola is a Chartered Accountant and business finance professional. She is very passionate about financial literacy and education. When she’s not crunching numbers, she loves spending time with family.