Life Income Fund (LIF)
Life Income Funds (LIFs) are a type of locked-in income account, similar to a Registered Retirement Income Fund (RRIF), but with certain restrictions. An LIF is a special type of RRIF into which you can transfer funds that originate from pension benefits under a federally regulated pension plan.
For example, when you cease to be a member of a Registered Pension Plan (RPP) before you reach retirement age, you must decide how your accumulated pension benefits are to be handled. The options available basically include any of the following:
- If permitted, you can leave your pension benefits with your pension plan and receive a pension upon reaching pension age.
- If permitted, transfer your accumulated pension benefits to another employer’s registered pension plan.
- Transfer your accumulated pension benefits to a locked-in savings account, such as a provincially regulated Locked-In Retirement Account (LIRA) or a federally regulated Locked-In Retirement Savings Account (LRSP).
- Use your accumulated pension benefits to purchase a deferred or immediate income annuity.
- Transfer your accumulated pension benefit into a locked-in income account, such as a provincially or federally regulated LIF.
Locked-in accounts fall into two categories:
- locked-in savings accounts (LIRAs or LRSPs): do not permit funds to be withdrawn on a regular, on-going basis and thereby allow your pension benefits to continue to save for your future retirement.
- locked-in income accounts (LIFs): enable you to receive regular payments from your accumulated pension benefits, thereby providing you with an income in retirement.
Note: While InvestingForMe provides a general discussion concerning the various aspects of LIFs governed by federal pension legislation, we do not discuss the guidelines for provincially regulated LIFs, as each province maintains its own pension legislation and the differences between each province’s pension legislation are numerous. In addition, changes in provincial pension legislation occur independently and sporadically. For more detailed information regarding the different provincial regulations, weprovide links to the pension administration websites for each of the provincial governments in our section link to Government Pension Websites