Locked-In Registered Retirement Income Fund (RRIF)

To Obtain an Income from Locked-in Amounts

The locked-in registered retirement income fund (RRIF) converts the savings accumulated in your client's pension plan or in his locked-in RRSP in order to obtain a retirement income.

Different locked-in plans exist in each Canadian province:

  • Life Income Fund (LIF)
  • Locked-in Retirement Income Fund (LRIF)
  • Restricted Life Income Fund (RLIF)
  • Prescribed Registered Retirement Income Fund (PRRIF)

Advantages of Locked-in RRIFs

  • In order to continue generating returns, the amounts are invested in an investment vehicle chosen by your client.
  • Returns on investments in locked-in RRIFs are tax sheltered.

Retirement Income Offered

All withdrawals are taxed as income.

Different withdrawal options from locked-in RRIFs are offered to meet your client's retirement income needs.

Minimum Income

The minimum income locked-in RRIF allows your clients to keep as much income as possible tax sheltered for future needs. Your client withdraws only the minimum income prescribed by the Income Tax Act.

The annual minimum income is established at the start of the year based on a percentage of the locked-in RRIF's residual value. This percentage depends on the age of your client or his spouse.

Fixed Income

The fixed income locked-in RRIF provides income stability.

Your client chooses the amount of his annuity based on his needs and the type of investment.

If the amount of his annuity is lower than what is established by law, the fixed annuity amount must be recalculated.

Payments from a LIF or LRIF are subject to the maximum permitted by law.

The annual minimum and maximum income is established at the start of the year based on a percentage of the locked-in RRIF's residual value. This percentage depends on the age of your client or his spouse.

Level Income (PRRIF only)

The level income PRRIF allows investors to divide the total amount of income over the desired number of years. The total income amount is thus equally distributed.

Maximum Income (LIF or LRIF Only)

The maximum income LIF or LRIF allows investors to withdraw the maximum amount of income possible to meet current financial needs.

Your client receives the maximum income stipulated under applicable pension legislation of the province or territory.

The annual maximum withdrawal amount is established at the start of the year based on a percentage of the residual value in the locked-in RRIF. This percentage depends on the age of your client.

In some provinces, your client who retires before turning age 65 may request payment of a temporary income to withdraw more than the maximum withdrawal amounts before age 65.

Example

Your client retiring at age 65 invests $100,000 in an annuity for 5 years.

If the return is evaluated at 3%, the average monthly payments and the residual value at the end of 5 years are as follows:

Retirement income Average monthly payment Residual value after 5 years
Minimum income $355 $93,000
Fixed income $500 $83,600
Level income (PRRIF) $1,790 $0
Maximum income (LIF or LRIF) - -
Manitoba, Quebec and Nova Scotia $567 $79,200
British Columbia, Ontario, New Brunswick and Newfoundland and Labrador $582 $78,200
Alberta $649 $73,800
Federal $476 $85,100

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