LIF (Life Income Fund)

The locked-in RRIF

A LIRA is the accumulation account for pension money you took with you when leaving an employer, most often the commuted value of a defined benefit pension. A LIRA cannot pay you income. When you want the money to start flowing, you convert it to a LIF, the locked-in counterpart of the RRIF.

The timing rules mirror the RRSP-to-RRIF path. You can convert as early as age 55 in most jurisdictions, and you must convert by December 31 of the year you turn 71 (as of July 2026), either to a LIF or to a life annuity from an insurance company. Inside the LIF, nothing changes about the investments: the same stocks, ETFs, GICs and bonds keep growing tax-deferred, and you keep managing them.

What makes a LIF a LIF is the pair of guardrails on withdrawals: a floor you must take out, exactly like a RRIF, and a ceiling you cannot exceed, which a RRIF does not have.

The minimum: identical to a RRIF

The LIF minimum is not a separate system. It uses the same federal table of age-based percentages as a RRIF: your January 1 balance multiplied by the rate for your age on January 1, starting the year after the LIF is opened. At 65 that rate is 4.00%, at 71 it is 5.28%, and it climbs from there (as of July 2026). The full schedule, the younger-spouse election, and the age-on-January-1 mechanics are covered in the RRIF minimum withdrawal article, and every word of it applies to a LIF.

The maximum: what makes a LIF different

The differentiator is the annual maximum withdrawal. Pension law locked this money in so it would provide income for life, and the maximum is how that promise is enforced after retirement: you cannot drain the account in a few enthusiastic years.

The maximum is set by a formula in your pension jurisdiction's rules, not by the CRA. The formulas vary, but most are built the same way: a reference interest rate published each year is combined with your age to produce the percentage of your January 1 balance you may withdraw that year. The result rises with age, since fewer years of income remain to protect. As a rough guide, maximums run from about 6% of the balance in your late 50s and 60s to about 11% through your 70s, reaching higher percentages in your 80s (as of July 2026). Your financial institution calculates the exact minimum and maximum for you each January.

Between the floor and the ceiling, the amount is entirely your choice, and you can change it every year.

Jurisdiction matters, a lot

Like a LIRA, a LIF is governed by the pension law the money came from, federal or provincial, not by where you live now. That jurisdiction determines three big things (as of July 2026):

• The maximum formula: each jurisdiction publishes its own factors and reference rate, so two 65-year-olds with identical balances can face different ceilings.
• Unlocking options: federal rules and several provinces (including Ontario, Alberta and Manitoba) allow a one-time 50% unlocking when you convert to a LIF, moving up to half the balance into a regular RRSP or RRIF with no maximum. Most jurisdictions also offer small-balance unlocking below a threshold tied to the Year's Maximum Pensionable Earnings, and some allow financial-hardship withdrawals.
• Québec: Retraite Québec has gone its own way. Québec does not offer 50% unlocking, but it removed the FRV withdrawal maximum for holders aged 55 and over in its recent reforms (as of July 2026). A Québec LIF holder past 55 faces only the minimum, which makes Québec locked-in money among the most flexible in the country at retirement.

Tax: same as a RRIF

Every dollar out of a LIF is taxable income. The minimum amount has no tax withheld at source; amounts above the minimum face the same withholding rates as RRIF excess withdrawals. Either way, the full amount lands on your return.

From age 65, LIF income qualifies for the federal pension income credit and for pension income splitting with a spouse, the same as RRIF income. For couples where one partner holds most of the retirement savings, splitting LIF income can meaningfully cut the household tax bill.

The older cousins: LRIF and PRIF

You may run into two older variants. The LRIF (Locked-In Retirement Income Fund) is a legacy account type that has been phased out in most jurisdictions, with existing accounts generally converted to LIFs. Saskatchewan and Manitoba instead offer the PRIF (Prescribed RRIF), which is locked-in money with no annual maximum at all, only the RRIF minimum.

Living with the guardrails

The minimum is not optional, so take at least that much and, if you do not need it for spending, redirect it to a TFSA or non-registered account rather than leaving the obligation to December.

The maximum is the constraint to plan around. A LIF is a poor source for lump sums: a new roof or a big trip can exceed the ceiling with no way to force more out that year. Keep a buffer outside the LIF for irregular expenses, or use 50% unlocking at conversion, where available, to move half the money somewhere without a ceiling.

Finally, a LIF is not the end of the road. You can use some or all of it to buy a life annuity at any point, trading the guardrails for a guaranteed cheque for life, an option worth pricing in your 70s when annuity rates work in your favour.