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Life Income Fund (LIF) Guide Canada 2026

Updated

This guide explains what a Life Income Fund is, where the money comes from, and how it pays retirement income. The year-by-year minimum and maximum percentages are in the LIF withdrawal rules, and the other locked-in account guides are in the RRSP and RRIF guide directory.

Short Answer

A Life Income Fund holds locked-in pension money from a former employer’s pension plan. It works like a RRIF (mandatory minimums, tax-deferred growth, taxable withdrawals) but adds a maximum withdrawal cap to prevent funds from being depleted too quickly. LIF rules — especially the maximum formula — vary significantly by province. For the higher-level retirement planning context, start with retirement income strategies in Canada.

How a LIF Relates to a LIRA and a RRIF

A LIF doesn’t exist on its own — it’s the income-phase destination for locked-in pension money, the same way a RRIF is the income-phase destination for RRSP savings. Money sits in a LIRA (locked in, with no direct withdrawals) until you’re ready to draw income, at which point it converts to a LIF (minimum and maximum withdrawals apply). A RRIF runs the same accumulation-to-income sequence for personal RRSP savings, but without the maximum — the cap is a pension-specific restriction, not a general registered-account rule. For the full side-by-side comparison of all three account types, see LIF vs LIRA vs RRIF; for the operational withdrawal rules once your LIF is running, see LIF withdrawal rules in Canada.

LIF Maximum Withdrawal Calculation

The LIF maximum is designed to ensure funds last to a projected age (usually 90). Ontario, BC, Alberta, New Brunswick, and Newfoundland and Labrador all use the same shared provincial formula: a variable rate based on the November Bank of Canada 10-year+ government bond yield for the first 15 years of retirement, plus a fixed 6.00% assumption for the years remaining to age 90 — the same underlying design as the separate federal (PBSA) formula. Manitoba and Nova Scotia use their own table instead, Saskatchewan’s newer accounts (PRIFs) have no maximum at all, and Quebec enforces no maximum from age 55 onward — see the summary table below. PEI has no pension legislation of its own governing locked-in accounts, so a PEI-sourced pension follows whichever other jurisdiction (often federal) actually governed the original plan. For the exact federal and provincial percentage tables by age, see the LIF withdrawal rules guide — the increase is substantial with age, reaching 100% of the balance at 89 under the federal formula.

Provincial LIF Rules Summary

ProvinceMaximum formulaOne-time unlock at conversion?Small balance unlock threshold
OntarioStandard provincial table✅ Yes (up to 50%, within 60 days of transfer)40% of YMPE ($29,840 in 2026), age 55+
British ColumbiaStandard provincial table❌ No, not offered under BC pension legislation20% of YMPE ($14,920 in 2026) under 65; 40% at 65+
AlbertaStandard provincial table✅ Yes (50%, at 50+)20% of YMPE under 65; 40% at 65+
New BrunswickStandard provincial table❌ No (but a separate one-time LIF withdrawal of up to 25% of the balance)Age-based; 40% of YMPE at 65+
Newfoundland and LabradorStandard provincial table❌ No10% of YMPE at any age; 40% from 55
SaskatchewanStandard provincial table for legacy LIFs; new accounts are PRIFs with no maximum❌ No20% of YMPE
ManitobaOwn table; a flat 20% from age 88✅ Yes (up to 50%, at 55+, to a prescribed RRIF)40% of YMPE at 65+ (lower before 65)
Nova ScotiaSame table as Manitoba✅ Yes (up to 50%, at 55+, within 60 days, since April 1, 2025)50% of YMPE, age 55+
QuebecOwn table, but no enforced maximum from age 55 onward❌ NoNone for LIFs since 2025 (LIRAs: 40% of YMPE at 65+)
Federal (PBSA)Federal (OSFI) table✅ Yes (up to 50%, age 55+, within 60 days, via RLIF only)50% of YMPE ($37,300 in 2026), age 55+

The exact percentages for each formula are in the LIF withdrawal rules guide. Unlock thresholds change — verify current provisions with your financial institution and provincial pension regulator.

LIF Unlocking Options

The unlocking grounds jurisdictions commonly recognize are a small total balance, financial hardship, non-residency and a shortened life expectancy, plus, in Ontario, Alberta, Manitoba, Nova Scotia and federally, a one-time transfer of up to 50% (in Ontario, within 60 days of the LIF transfer; in Alberta at 50+, when the LIF is set up; in Manitoba at 55+, to a prescribed RRIF from a LIRA or LIF; in Nova Scotia at 55+, within 60 days of moving into a new LIF; federally at 55+, within 60 days, but only by setting up a restricted LIF, or RLIF, instead of a standard federal LIF). BC does not offer that one-time transfer option under its own pension legislation, despite sometimes being lumped in with Ontario and Alberta in informal summaries. Once unlocked to an RRSP or RRIF, the funds are no longer subject to LIF maximum restrictions and can be accessed flexibly or transferred under standard RRSP/RRIF rules.

For the full criteria, dollar thresholds, and process for each unlocking type, see LIF withdrawal rules in Canada. If you’re still in the pre-conversion, LIRA stage, see LIRA withdrawal rules Canada instead.

Tax on LIF Withdrawals

Withdrawal amountWithholding appliedFinal tax treatment
Minimum (same as RRIF factor)No withholdingFully taxable as income
Above minimum, up to maximum10% to 30% withholding on the amount above the minimum, depending on its size (different rates in Quebec)Fully taxable as income
Unlocked lump-sum transfer to RRSPNo tax (in-plan transfer)Tax deferred into RRSP

Death and Survivor Benefits

BeneficiaryTreatment
Spouse or common-law partner (unless they waived the entitlement)Survivor benefit: LIF moves to the spouse’s own registered plan, no immediate tax
Financially dependent child/grandchildCan qualify for a tax-deferred transfer under federal tax rules (an annuity to age 18, or an RRSP, RRIF or RDSP if dependent because of an infirmity); pension law decides who is paid
Adult children or estateFull balance taxed as income in deceased’s final return

In several jurisdictions, your spouse or common-law partner must sign a waiver before you can set up a LIF (in Alberta, for example, they give up the joint and survivor pension on Form 10). This is a pension law requirement, not a CRA rule, so the financial institution will ask for it.

Bottom Line

A LIF is the income-phase vehicle for Canadians with locked-in pension assets. It works like a RRIF but with a hard cap on annual withdrawals, which makes detailed income planning more important. Look into the one-time unlocking option if your LIF falls under Ontario, Alberta, Manitoba, Nova Scotia or federal PBSA rules (via an RLIF) and you want more flexibility (BC does not offer it), and check your province’s specific maximum formula at conversion time. If you are choosing the investments to hold once the LIF is active, see best ETFs for retirement income in Canada.

→ Back to: Complete RRSP Guide

Sources

The figures and rules on this page come from these sources, last checked against them between August 29, 2026 and September 25, 2026. How we check facts.