Life Income Fund (LIF) withdrawal percentages for 2013

Financial institutions are required to calculate a client’s maximum income each year from Life Income Funds (LIFs) based on the client's age and the value of the plan on January 1st and the current year’s CANSIM rate.

The CANSIM rate is set monthly by the Government of Canada based on that month's average rate for long term Government of Canada bonds. The formula used to calculate a client’s maximum payment is based on the previous year's November 30th CANSIM rate.

For 2013 LIF maximum calculations, a 2.20% CANSIM rate is used for Federal (PBSA), a 6% CANSIM reference rate is used for Quebec, Manitoba, Nova Scotia and British Columbia and a 6% CANSIM rate is used for the rest of Canada.

Below is the 2013 table of LIF minimum and maximum withdrawal percentages:

*Please note the provincial legislation which governs your plan has minimum age requirements before payments from a LIF can be received. 

LIF maximum calculations are based on the provincial legislation or federal legislation that governs your plan. Each province has their own provincial pension legislation, below is a brief outline of the provincial rules governing their respective pension plans. 

Quebec, Manitoba, New Brunswick, Nova Scotia & British Columbia pension legislation permits LIF clients who begin a LIF in the middle of a calendar year with funds transferred from a LIRA or pension plan to take the FULL maximum payment for the year. First year payments under the other jurisdictions must be prorated based on the number of months the LIF was in force.

Ontario LIF & LRIF maximum calculations are based on the greater of 1) the result using the factor and 2) the previous year’s investment returns.

Saskatchewan & Newfoundland and Labrador requires LIFs to be converted to a life annuity at age 80.

British Columbia LIF maximum calculation is based on the same reference factors as QC, MB and NS. However, the BC calculation is the greater of 1) the result using the applied factors and 2) the previous year’s investment returns under the LIF contract (must be the same LIF contract).

Manitoba LIF maximum calculation is based on the same reference factors as BC, QC and NS. However, the MB calculation is the greater of 1) the result using the applied factors and 2) the previous year’s investment returns under the LIF plus 6% of the value of all transfers in from a LIRA or Pension Plan during the current year.

Alberta LIF maximum calculation is based on the greater of 1) the result using the new factors or 2) the previous year’s investment returns. The CANSIM factor is based on a life annuity to age 85, which results in a higher percentage rate.

The information provided on this web site is intended for general information only. It should not be construed as legal, accounting, tax or specific insurance and investment advice. Clients should consult a professional advisor concerning their situations and any specific insurance and investment matters. While reasonable steps have been taken to ensure that this information was accurate as of the date hereof, Stone-Hedge Financial Group Inc. and its affiliates make no representation or warranty as to the accuracy of this information and assume no responsibility for reliance upon it.