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

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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).

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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

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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.

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Our Team

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Ottawa Office

Benoit Poliquin
Benoit Poliquin, CFA, CFP
President & Lead Portfolio Manager
Graham Mayes
Graham Mayes, CFP, TEP, MTI
Chief Investment Strategist & Partner
Mathew Hall
Mathew Hall, CFA, CFP
Partner & Portfolio Manager
Tyson Charlebois
Tyson Charlebois, CFA
Partner & Portfolio Manager
Stephan Desbiens
Stephan Desbiens, CIM, PFP
Partner & Associate Portfolio Manager
Marlène Chainé
Marlène Chainé, CIM
Partner & Associate Portfolio Manager

Operations

Gloria Semaan
Gloria Semaan
Operations Manager
Darrell Mayo
Darrell Mayo, MFIN
Associate Portfolio Manager & Trader
Jessica El-Sheikh Ali
Jessica El-Sheikh Ali
Investment Account Manager

Toronto Office

Gerret W. Kavanagh
Gerret W. Kavanagh, CFA, CIM, CFP, FSCI, CLU, MBA, BSC
Partner & Associate Portfolio Manager

Winnipeg Office

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