Pension Benefits Standards Regulations, 1985 — 20.3
20.3 (1) The contract or arrangement establishing a restricted life income fund shall (a) set out the method of determining the value of the restricted life income fund, including the valuation method used to establish its value on the death of the holder of the fund or on the transfer of assets from the fund; (b) provide that the holder of the restricted life income fund shall, at the beginning of each calendar year or at any other time agreed on by the financial institution with whom the contract or arrangement was entered into, decide the amount to be paid out of the fund in that year; (c) provide that, in the event that the holder of the restricted life income fund does not decide the amount to be paid out of the fund in a calendar year, the minimum amount determined in accordance with the Income Tax Act shall be paid out in that year; (d) provide that, for any calendar year before the calendar year in which the holder of the restricted life income fund reaches 90 years of age, the amount of income paid out of the fund shall not exceed the amount determined by the formula C/F where C is the balance in the restricted life income fund (i) at the beginning of the calendar year, or (ii) if the amount determined under subparagraph (i) is zero, on the day on which the initial amount is transferred into the fund; and F is the value, at the beginning of the calendar year, of a pension benefit whose annual payment is $1, payable on January 1 of each year between the beginning of that calendar year and December 31 of the year in which the holder reaches 90 years of age, established using an interest rate that, (i) for the first 15 years after January 1 of the year in which the restricted life income fund is valued, is less than or equal to the monthly average yield on Government of Canada marketable bonds of maturity over 10 years, as published by the Bank of Canada, for the month of November before the beginning of the calendar year, and (ii) for any subsequent year, is not more than 6%; (e) provide that, for the calendar year in which the holder of the restricted life income fund reaches 90 years of age and for all subsequent calendar years, the amount of income paid out of the fund shall not exceed the value of the funds held in the fund immediately before the time of the payment; (f) provide that, for the calendar year in which the contract or arrangement was entered into, the amount determined under paragraph (d) or (e), as the case may be, shall be multiplied by the number of months remaining in that year and then divided by 12, with any part of an incomplete month counting as one month; (g) provide that if, at the time the restricted life income fund was established, part of the fund was composed of funds that had been held in another restricted life income fund of the holder earlier in the calendar year in which the fund was established, the amount determined under paragraph (d) or (e), as the case may be, is deemed to be zero in respect of that part of the fund for that calendar year; (h) provide that the funds in the restricted life income fund may only be (i) transferred to another restricted life income fund, (ii) transferred to a restricted locked-in savings plan, or (iii) used to purchase an immediate life annuity or a deferred life annuity; (i) provide that, on the death of the holder of the restricted life income fund, the funds in that fund shall be paid to the survivor of the holder by (i) transferring the funds to another restricted life income fund or to a life income fund, (ii) transferring the funds to a locked-in registered retirement savings plan or to a restricted locked-in savings plan, or (iii) using the funds to purchase an immediate life annuity or a deferred life annuity; (j) provide that, except as provided in subsection 25(4) of the Act, the funds in the restricted life income fund shall not be assigned, charged, anticipated or given as security and that any transaction purporting to assign, charge, a