Individual Pension Plan

If you’re looking to start saving money for the future with retirement planning, we will recommend an individual pension plan designed to provide you with enhanced retirement benefits and important tax advantages. Our goal is to help you feel confident about your retirement with a sufficient amount of funds that can help you maintain a decent lifestyle

Make the Most of Your Retirement

What is an IPP?

An IPP is a defined benefit Pension Plan that is registered with the federal and provincial governments. IPPs allow the largest retirement benefit under pension legislation. They are typically significantly larger than RRSPs or Group RRSPs. IPPs have much larger contribution room when compared to an RRSP. IPP assets are protected and creditor-proof.

Is an IPP right for you?

IPPs are an ideal retirement planing for business owners, executives, incorporated professionals, or employees with over 10 years of history with their employers. Typically, those who are 45 and older benefit the most from using an IPP.

The Benefits

IPPs solidify retirement benefits to the plan holder, which is guaranteed by the business. Past service contributions based on salary and years of service can provide a significant tax deductible contribution to the IPP. Your company will make the contributions on your behalf, which are a tax deductible expense to your company. Ensure that you maximize the financial benefit of being a business owner, incorporated professional, or executive. Your retirement should be part of your compensation.

The Costs

IPPs contain two cost elements – the actuary fee and the investment management fee. Typically this fee is 1.00% to 1.75% of the plan’s assets. This is 10% to 30% less than the cost of a typical mutual fund! Additionally, there is a one time setup fee of $3000 + HST and regulatory filing costs of about $250 annually.

Example of an Ideal Individual Pension Plan Situation

John Smith is a 55 year old business owner. After paying off his house and children’s education, he wants to contribute more to his retirement. The business is very successful and the extra earnings are piling up. He has an RRSP worth $450,000 and has been taking his salary from his business for the last 10 years. As a result of these past years of service, he will have a $200,000 past service contribution from his business to help fund the IPP (*see assumptions below).
Example of an Ideal Individual Pension Plan Situation.
As the above graph shows, the first year IPP contributions are $29,500 vs only $22,970 for an RRSP (2011). At age 65, the IPP contribution is a full 93% greater than the traditional RRSP.

IPP vs RRSP Plan Value

Individual Pension Plan Canada: IPP vs RRSP Plan Value

This graph shows how much faster the IPP value surpasses the RRSP value by 102.65% by age 71 due to the higher contribution limits. There is a $200,000 increase for the IPP vs the RRSP in the first year due to the past service contribution, which is a tax deductible expense to the business.


* Assumptions: 6% rate of return, 2.91% CPI (inflation), salary increase of 3% per year, investment management fees of 2.5% per year, maximum pensionable earnings each year, full past service from 1991. RRSP rolls into the IPP when the IPP is created, contribution timings are at the beginning of each year.


If you think that an Individual Pension Plan could be ideal for your situation, let us know. We will calculate the benefits of the IPP tailored to your situation for no cost or obligation. We will give you a detailed breakdown of how the IPP could work with your current situation.

Frequently Asked Questions

An IPP is a defined benefit plan which is exactly like the plans you would be a member of if you worked for large employers such as railway companies or the federal public service. In the case of the IPP, your company is the sponsor of the plan. IPPs are specifically designed for business owners. Your RRSP would be considered a defined contribution plan. The difference between a defined contribution (where you don’t know the outcome, but know how much you can contribute every year) and the defined benefit (where your contribution will be based on your age, years of service and salary and the retirement benefit is known) is the fact that the investment risk is borne by the contributor in the case of a defined contribution plan and the risk is borne by the sponsor in the case of a defined benefit plan.

For the company sponsoring the plan, all contributions are tax deductible. The beneficiary of the IPP will no longer make RRSP contributions, as they are replaced by the IPP contributions made by the sponsor.
IPPs are for business owners. Should you sell or wind down your company, there are measures in place so that your pension assets continue on for you.
IPPs are designed for business owners and professionals.
An IPP is made up of annual contributions made on behalf of the plan beneficiary (owner) by the sponsor (company). There is also a past service contribution which can be a large tax-deductible amount which is usually the start of the IPP. This past service contribution is the amount that could have been contributed to a plan but was not. You can effectively make up for lost time with these contributions. Most will roll in their RRSP assets into the IPP as well.
Reach out to [email protected] for a free, no obligation questionnaire that we will send to you. An actuary will review your questionnaire and send you a personalized case study to see if you are a candidate for an IPP. You must have received T4 income in the past from the plan sponsor in order to qualify for an IPP.
If the company is sold and you stay on with the company, the IPP can continue as well. If your holding company is part of the sponsor, the IPP can continue with no change. The final step would be if the plan has to be matured and annuitized – the plan will no longer exist and the funds must be withdrawn according to the pension act.
The IPP contributions are higher for plan members of 45 years old and older, and will grow to be substantially much larger than RRSP contributions.

Book a Consultation

Schedule a 15-minute consultation with us to get started.