Expertise
Retirement savings plans and asset management
Individual pension plan (IPP)
An IPP is a defined-benefit pension plan designed for business owners and incorporated professionals. Unlike an RRSP, the amount of pension income you will receive at retirement is determined in advance according to a pension formula.
This type of plan is funded by the corporation and offers significant tax advantages for both the employer and the participant.
Who is the ideal candidate?
An IPP is particularly suitable for a business owner or incorporated professional who:
- Is at least 40 years of age;
- Receives a T4 salary of at least $100,000 per year;
- Owns at least 10% of a class of shares in their company.
Even if your annual income is below $100,000, an IPP may still be advantageous if you have significant unused RRSP contribution room.
IPP Advantages
For the company
- Contributions are tax-deductible for the company.
- Contributions are not subject to payroll taxes.
- Actuarial, administrative, and investment management fees paid by the company are tax-deductible.
- The company can contribute anywhere from $0 to the maximum recommended by the actuary each year.
- The IPP can be terminated at any time.
- Family members employed by the company can participate.
- The IPP can help reduce the company’s passive income.
- IPP assets reduce shareholder equity, which can facilitate the sale of the company.
For the participant
- The plan is fully funded by the company.
- Maximum contributions are often higher than those of an RRSP.
- Possibility of recognizing past years of service before the plan is established, increasing the retirement pension.
- Contributions are not considered a taxable benefit.
- Assets grow tax-sheltered.
- Investment diversification.
- Stable and predictable retirement income.
- Pension income splitting with a spouse.
- Assets are protected from creditors.
- Assets are not locked in.
- Upon termination, any surplus—if applicable—belongs to the participant.
IPP vs. RRSP comparison
| Criteria | IPP | RRSP |
|---|---|---|
| Contributions | Higher after age 40 | Limited by annual cap |
| Funding | Paid by the corporation | Paid by the individual |
| Asset protection | Creditor-proof | Generally not protected |
| Predictability | Guaranteed pension | Depends on investment returns |
| Fees | Deductible for the company | Paid by the individual |
Documentation
Illustration request questionnaire
IPP brochure
