Lifetime Income Fund (LIF)

A LIF is a registered retirement income fund that is used to hold pension funds and eventually payout retirement income.

A LIF cannot be withdrawn in a lump sum; rather, you must use the fund in a manner that supports retirement income for your lifetime. Each year's Income Tax Act specifies the minimum and maximum withdrawal amounts for LIF owners, which takes into consideration the LIF fund balance and the owner's annuity factor.

The features of the LIF include:

  • Establishing a LIF is most commonly done by age 55, but must be done no later than the year the annuitant turns 71
  • LIF payments are subject to a minimum and maximum withdrawal limit set by the Income Tax Act
  • The LIF owner must specify at the beginning of each fiscal year the amount of income he or she would like to withdraw - this must be within a defined range to ensure the account holds enough funds to provide lifetime income for the LIF owner
  • Members may choose from a range of LIF eligible investments through Aldergrove Credit Union or Aldergrove Financial Planning

The benefits are:

  • Flexibility – many payment options to suit your needs such as:
    • Monthly
    • Quarterly
    • Semi-annually
    • Annually
  • Eligible for patronage rebates on interest earned when approved for payment
  • Allows scheduled withdrawals directly from the LIF terms rather than having to keep funds in the variable account which pays a lower rate of interest - withdrawals come from the lowest interest earning LIF product under the contract
  • The Credit Union Deposit Insurance Corporation of British Columbia, a statutory corporation, fully guarantees all deposits
 

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