A LIF-Type payment is similar to an external Life Income Fund (LIF) but asset remain under the UBC Faculty Pension Plan.
You may use all, or part of, the locked-in account balance to set up an income stream to meet your personal needs. The payments can be set up for any amount between the applicable statutory minimum and maximum amounts per calendar year.
The minimum required amount of withdrawal is based on your age as of January 1st each calendar year. Alternatively, you may use your spouse’s lower age, if applicable, to determine the minimum payment required and potentially reduce your tax obligation.
The maximum annual limit is the greater of:
- the investment rate of return in the previous calendar year, or
- the withdrawal percentage based on your age as at January 1st each calendar year
Please review the LIF-Type Payments Information Sheet to gain a comprehensive understanding this retirement benefit option. As the assets remain under the UBC Faculty Pension Plan, you will continue to control the investment of your account, benefit from the low fee structure of the UBC FPP investment funds and no administration fees.
You may also collapse your LIF-Type payments agreement to purchase another retirement product, either externally or within the Plan, in the future.
The Sun Life Retirement Income Estimator tool can be used to produce estimates of LIF-Type Payment option, as well as the other options from the UBC retirement plans. To access the Retirement Income Estimator, sign in to your account at mysunlife.ca/ubcfpp, then under Investments, select Manage Plan > my plan > Tools > Retirement Income Estimator.
Tax Implications
Pension income is considered taxable income in the year that they are received and taxes will be withheld at source. Scheduled periodic payments (ie. monthly, quarterly, semi-annually) will be annualized for the purpose of determining the withholding tax rate for each periodic payment. For Canadian residents, the withholding tax rate is between 10% and 30%. In Quebec, the rate is between 5% and 15% plus provincial withholding tax.
| Annualized Payments | Withholding Tax Rate (except Quebec) | Withholding Tax Rate in Quebec |
|---|---|---|
| Up to $5,000 | 10% | 5% |
| Between $5,001 and $15,000 | 20% | 10% |
| More than $15,000 | 30% | 15% |
The above rates are set by the Canada Revenue Agency. These rates do not represent the actual tax that may be owed by an individual plan member. Taxes owing is determined by the plan member’s personal tax rate when filing his or her tax return for the year in which the benefit payment(s) is received. You may also request additional taxes to be withheld.
If you are not residing in Canada at the time of the benefit payment(s), tax withheld is based on your country of residence, at a fixed rate of 25% or lower if there is a tax treaty.
Consider All Your Options
Prior to selecting any retirement option, we recommend that your review all of your options.
If you are under age 55:
If you are over age 55:
Forms Required
The following forms must be completed and submitted to the Pension Administration Office before LIF-Type payments can be initiated. You may also use the Retiree Checklist to assist you in completing your application.
For payment method, complete:
- Direct deposit enrolment form (Canadian banks only), or
- Request for benefit payment by wire form
A proof of age document for both you and your spouse (if applicable). Accepted documents include:
- BC Driver’s License and Services Card* (combined)
- BC Photo ID Card*
- BC Services Card*
- Birth Certificate
- Canadian Citizenship Card (issued prior to February 2012)
- Driver’s Licence* (regular or enhanced)
- Nexus Card*
- Passport*
- Permanent Resident Card*
- Secure Certificate of Indian Status*
*All asterisked documents must have a valid expiry date (not expired) at the time of submitting your documents.
If you are a non-resident of Canada, please complete a Form NR301, Declaration of eligibility for benefits (reduced tax) under a tax treaty for a non-resident person.
Do You Have a Spouse?
If you have a spouse, your spouse must agree to the use of pension funds for LIF-type payments by completing the following BC prescribed form:
- Form 3 – Spouse’s Consent to a Transfer to a Life Income Fund or Establishment of a Life Income Type Benefits Account
- View detailed instructions on how to complete Form 3.
If your spouse is waiving the right to a post-retirement death benefit in favor of another beneficiary, your spouse must also complete Waiver C on the following BC prescribed form:
- Form 2 – Spouse’s Waiver of 60% Lifetime Survivor’s Benefit and/or Beneficiary Rights From a Pension Plan or Annuity After Payments Start
- View detailed instructions on how to complete Form 2.
Death Benefits
In the event of your death, your spouse may continue to receive LIF-Type payments or elect another termination/retirement option under the Plan. If you do not have a spouse or if your spouse has waived their right to the survivor’s benefit, the market value of the pension account is paid to your designated beneficiary(ies) or estate in a lump sum.
Submitting Your Forms
Please submit your forms to the Pension Administration Office 4 to 6 weeks prior to your first payment date. You will receive a Welcome Letter from Sun Life after your LIF-type payments have been set up.
If you require assistance, please contact us.