What is the maximum amount of money I am allowed to take out of my Life Income Fund (LIF) under the Pension Benefit Standards Regulations?
Section 26 of the Pension Benefits Standards Act, 1985 (PBSA) gives pension plan members the opportunity, upon ceasing membership in the plan - but before becoming eligible to retire and draw a pension - to transfer the value of that pension to another pension plan or a "Retirement Savings Plan", as defined in the PBSA Regulations. This option is also available to a member's survivor, in the event of the member's death.
Section 19.1 of the Regulations states that a Retirement Savings Plan, into which a pension benefit credit can be transferred, is a Life Income Fund or a Locked-in Registered Retirement Savings Plan.
The periodic income from the LIF is subject to minimum and maximum limits. The maximum limit is defined in Section 20.1 of the Regulations, and is intended to maintain a retirement income for the member.
The "LIF Maximum Payment Amount Table" provides users with values representing fractions of the fund, which may be drawn during the year by former plan members whose pension benefit credits have been transferred to a LIF. OSFI will update the table annually, using the prevailing applicable Canadian Socio-economic Information Management (CANSIM) interest rate (B14013).
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Life Income Fund: LIF Maximum Payment Amount Table
Note: Where this information conflicts with the Pension Benefits Standards Act, 1985 (PBSA) or Regulations (PBSR), the PBSA or PBSR will govern.
Interest rate assumption used in the table:
In determining the maximum limit applicable to the income from a LIF in a given year, the rules underlying the LIF require the following interest assumption:
- The CANSIM B14013 (also referred to as series V122487) rate in effect during the preceding month of November for the first 15 years, and
- 6.00% for the years remaining to the end of the year in which the LIF owner attains 90 years of age.
The CANSIM B14013 rate for November 2006 was 4.03%. Therefore, the maximum limit applicable to income to be drawn from any federally regulated LIF during 2007 is determined according to the following interest assumption:
- 4.03% for the first 15 years, and
- 6.00% for the years remaining to the end of the year in which the LIF owner attains 90 years of age.
For the calendar year in which the contract or arrangement is first entered into, the percentage of the balance in the LIF must be multiplied by the number of months remaining in that year divided by 12, with any part of an incomplete month counting as one month.
2007 Maximum Annual Payment Amount Table for an OSFI Life Income Fund (LIF)
This table has 4 columns:
- Age at January 1, 2007
- New age during 2007
- Years to end of year age 90 is attained
- Maximum payment as a percentage of the LIF balance as at January 1, 2007.
|
OSFI 2007 |
|
November CANSIM B14013: 4.03% |
|
Age on Jan 1 |
Age on Dec 31 |
Total Years |
Percentage of LIF Value |
|
48 |
49 |
42 |
5.1856% |
|
49 |
50 |
41 |
5.2185% |
|
50 |
51 |
40 |
5.2538% |
|
51 |
52 |
39 |
5.2918% |
|
52 |
53 |
38 |
5.3326% |
|
53 |
54 |
37 |
5.3766% |
|
54 |
55 |
36 |
5.4241% |
|
55 |
56 |
35 |
5.4753% |
|
56 |
57 |
34 |
5.5306% |
|
57 |
58 |
33 |
5.5905% |
|
58 |
59 |
32 |
5.6554% |
|
59 |
60 |
31 |
5.7258% |
|
60 |
61 |
30 |
5.8025% |
|
61 |
62 |
29 |
5.8860% |
|
62 |
63 |
28 |
5.9772% |
|
63 |
64 |
27 |
6.0770% |
|
64 |
65 |
26 |
6.1865% |
|
65 |
66 |
25 |
6.3070% |
|
66 |
67 |
24 |
6.4399% |
|
67 |
68 |
23 |
6.5870% |
|
68 |
69 |
22 |
6.7505% |
|
69 |
70 |
21 |
6.9329% |
|
70 |
71 |
20 |
7.1374% |
|
71 |
72 |
19 |
7.3676% |
|
72 |
73 |
18 |
7.6285% |
|
73 |
74 |
17 |
7.9261% |
|
74 |
75 |
16 |
8.2678% |
|
75 |
76 |
15 |
8.6639% |
|
76 |
77 |
14 |
9.1182% |
|
77 |
78 |
13 |
9.6443% |
|
78 |
79 |
12 |
10.2603% |
|
79 |
80 |
11 |
10.9905% |
|
80 |
81 |
10 |
11.8692% |
|
81 |
82 |
9 |
12.9460% |
|
82 |
83 |
8 |
14.2951% |
|
83 |
84 |
7 |
16.0333% |
|
84 |
85 |
6 |
18.3550% |
|
85 |
86 |
5 |
21.6109% |
|
86 |
87 |
4 |
26.5006% |
|
87 |
88 |
3 |
34.6584% |
|
88 |
89 |
2 |
50.9866% |
|
89 |
90 |
1 |
100.0000% |
If the minimum withdrawal amount specified in the Income Tax Regulations exceeds the maximum withdrawal amount permitted under subsection 20.1 of the Pension Benefits Standards Regulations, 1985 (determined in accordance with the above table), the maximum withdrawal amount can be equal to the minimum withdrawal amount.
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I am no longer a resident of Canada. Can the funds in my RRSP or my LIF be unlocked?
Section 28.4 of the Pension Benefits Standards Regulations, 1985 exempts pension benefits and pension benefit credits from the locking-in provisions of the PBSA. Existing locked-in RRSPs or Life Income Funds (LIF) can be unlocked as long as you have ceased to be a resident of Canada for at least two calendar years.
PBSA Update No.26, September 2006 provides further information on this.
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Is the yearly maximum amount of income payable out of a pre-existing LIF increased if money is transferred from a locked-in RRSP or pension plan to that LIF during a year?
No. Subsection 20.1(1)(d) of the Pension Benefits Standards Regulations, 1985 provides that the maximum amount of income payable for the calendar year will be calculated based on the balance of the LIF at the start of the calendar year.
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