LIRA & LIF explained

A LIRA (Locked-In Retirement Account) is a registered account that holds money which originally came from a workplace pension plan. When you leave an employer and transfer the commuted value of your defined-benefit pension — or move money out of a defined-contribution plan — the tax-deferred portion lands in a LIRA rather than an RRSP.

A LIRA behaves like an RRSP in two ways: it grows tax-deferred, and you choose how it is invested. But it differs in two crucial ways — you cannot make new contributions, and you generally cannot withdraw from it. The money is "locked in" because it is meant to replace the lifetime pension income you gave up. (In federally regulated plans the same account is often called an LRSP or RLSP.)

A LIF (Life Income Fund) is what a LIRA becomes when you are ready to turn your locked-in savings into retirement income. The relationship mirrors the familiar RRSP → RRIF path: just as an RRSP must convert to a RRIF to pay you out, a LIRA must convert to a LIF (or be used to buy a life annuity).

Once converted, the LIF pays you an income each year — but with one important constraint that a RRIF does not have: there is a maximum you are allowed to withdraw, not just a minimum. That ceiling exists to make the pension money stretch across your lifetime. Provincial variations go by other names — LRIF, RLIF (federal), and PRIF (Saskatchewan and Manitoba, which has no maximum) — but the core idea is the same.

If you already understand a RRIF, you are most of the way to understanding a LIF. They share the same conversion deadline and the same minimum-withdrawal factors. The defining difference is the annual maximum:

In short: a LIF is a RRIF with a ceiling. Everything else — the tax treatment, the age-71 deadline, the minimum factors — is the same.

Each year you must take at least the minimum and no more than the maximum. The minimum uses the exact same CRA factors as a RRIF — a percentage of the account's January 1 value that rises with age:

Below age 71 the minimum is simply 1 ÷ (90 − your age). From 71 on, the CRA's prescribed schedule applies, reaching 20% at age 95 and older.

The maximum is what makes a LIF different. It is set by a formula based on your age and a prescribed reference rate tied to long-term Government of Canada bond yields, recalculated every January, and it varies by province. As a rough guide the maximum runs from the high single digits to low double digits of the account value — for example, an Ontario LIF maximum at age 65 has been in the area of 6–7% in recent years (illustrative — confirm the current year's figure). Saskatchewan and Manitoba PRIFs are the exception: they have no maximum at all.

You must convert your LIRA by December 31 of the year you turn 71 — the same hard deadline that applies to an RRSP. At that point your options are to open a LIF, buy a life annuity, or use a combination of the two. Income then begins the following calendar year.

You do not have to wait until 71, though. You can convert a LIRA to a LIF earlier — provincial rules often allow it from age 55 (or whatever your former pension's early-retirement age is) — if you want to start drawing income sooner. Many people leave the money invested in the LIRA until they actually need the income, then convert.

"Locked in" is not always absolute. Most jurisdictions allow a handful of unlocking provisions, though the exact thresholds and availability differ by province and for federal (OSFI) plans. The common ones (Ontario figures shown as an example) are:

• One-time 50% unlock — when you move a LIRA to a LIF, you can transfer up to half the balance to an RRSP or RRIF within 60 days (Ontario; federal plans do this via an RLIF).
• Small balance — if you are 55 or older and all your locked-in money is below a set threshold (about $29,840 in 2026 in Ontario, = 40% of the year's YMPE), you can withdraw or transfer it out.
• Financial hardship — low expected income, medical costs, or risk of eviction can qualify; in Ontario you apply directly to your financial institution.
• Shortened life expectancy — with a doctor's certification, you may unlock some or all of the account.
• Non-residency — once the CRA confirms you have been a non-resident of Canada for at least two years, you can usually unlock the full amount.

Whatever the route, remember the tax rule: money you transfer to an RRSP or RRIF stays tax-deferred, but anything you take as cash is fully taxable that year.

This trips people up: the rules that govern your LIRA or LIF come from the jurisdiction that regulated the original pension plan, not necessarily where you live now. Most workplace plans are provincially regulated (Ontario, Alberta, B.C., Quebec, and so on), each with its own unlocking thresholds and maximum-withdrawal formula.

Some plans are federally regulated under the Pension Benefits Standards Act and overseen by OSFI — typically banks, airlines, telecoms, and interprovincial transport. Those use the federal locked-in accounts (LRSP, RLSP, and RLIF). Because the maximums and unlocking rules genuinely differ, always confirm which jurisdiction your money falls under before you plan a withdrawal — your account statement or plan administrator can tell you.

This guide is for educational purposes only and is not financial advice. Minimum-withdrawal factors reflect the CRA's post-2015 schedule; LIF maximums, unlocking thresholds, and the 2026 small-balance figure shown are illustrative and vary by province and for federally regulated plans. Locked-in rules depend on the jurisdiction of your original pension — confirm the figures that apply to your account with your plan administrator or a qualified financial planner. See our commuted value guide and withdrawal order guide for related reading.