Which statement accurately describes a Life Income Fund (LIF)?

A Life Income Fund (LIF) is specifically designed for individuals who have received benefits from a pension plan and wish to transfer those funds into a vehicle that will allow for continued income generation during retirement. The primary purpose of a LIF is to provide a steady income stream while ensuring that the funds last for the individual's lifetime, in accordance with regulations that govern minimum withdrawal amounts.

This type of fund is subject to specific rules regarding withdrawals and the preservation of capital, which may include restrictions on how much can be withdrawn annually. Therefore, it is not accurate to say that it allows for unlimited withdrawals or that it functions like a standard RRSP since both of those options have different implications and structures.

In summary, the definition of a LIF as it pertains to transferring pension plan benefits and being specifically tailored to support retirees highlights its fundamental role in pension and post-retirement planning.