Do you have a true pension plan?

If you're an incorporated professional or small business owner, consider replacing your RRSP with a Personal Pension Plan.

What is it?

A Personal Pension Plan is a registered pension plan without the limitations of Registered Retirement Savings Plans (RRSPs) and Individual Pension Plans (IPPs).

Key Advantages

Comparing with RRSPs

Larger contributions: A Personal Pension Plan enables you to make larger tax-deductible contributions than an RRSP allows. Every year. Accumulating more gives you a larger pension. If investment returns are poor, you can make additional tax-deductible contributions. If your income fluctuates, you can switch between DB and DC each year.

Compound growth: Your investments grow faster when you invest as early as possible. You might not have the money then (e.g., family expenses, mortgage, lower earnings). The PPP compensates by allowing much higher tax-deductible contributions in later years (e.g. from ages 45-65).

Creditor protection: Is your RRSP protected from claims by trade-creditors? You may be surprised (or shocked). Pension assets are protected. For your RRSP to have protection in Ontario, you must buy from an insurance company.

Tax-deductible loan interest: While you can borrow to invest in an RRSP, with a Personal Pension Plan, the loan interest is tax-deductible. That saves money or allows you to borrow more to build your pension faster.

Tax-free intergenerational transfers: Your RRSP can transfer to your spouse tax-free at your death but there will be a taxable deemed disposition when your spouse's death. The Personal Pension Plan can continue intact in a family-owned business. That means

  • no deemed disposition
  • no probate process or costs
  • a pension for your family members in the business

Corporate funding: While your RRSP contributions are tax-deductible, you pay from your own income. The Personal Pension Plan is funded with corporate dollars. Your corporate retained earnings can be used for funding and earn investment income in a tax-sheltered environment.

Investment flexibility: A Personal Pension Plan allows investments which aren't permitted in your RRSP.

Comparing with IPPs

If you're familiar with an Individual Pension Plan (IPP), the PPP is a more flexible enhancement that adds the options for Defined Contributions and Additional Voluntary Contributions.

The Components

A Personal Pension Plan has three components:

  1. Defined Benefit (DB): for pre-defined benefits based on your age, income and years of service; the kind of pension you often get as a government employee or with a traditional Individual Pension Plan (IPP)
  2. Defined Contribution (DC): operates like an RRSP with a mandatory contribution of 1%; ideal if you're younger (say under 40) or have volatile earnings.
  3. Additional Voluntary Contributions sub-account: where you transfer your current RRSP assets tax-free.

The Source

The Personal Pension Plan comes to you from INTEGRIS Pension Management Corporation Inc and iA Financial Group (formerly called Industrial Alliance Insurance and Financial Services) through your Taxevity team. We guide you through each step and provide ongoing support.

This video is from INTEGRIS.

An Interview

Find out more about the Personal Pension Plan in this Tea At Taxevity interview with the creator, Jean-Pierre Laporte.

Learn More

Here is more information about Personal Pension Plans:

Who Qualifies?

The PPP is for incorporated professionals and small business owners.

The plan sponsor is a Professional Corporation or Canadian-Controlled Private Corporation (CCPC).

The plan member requires T4 income (e.g., salary and bonuses). This is the same requirement as for an RRSP.

Is a PPP right for you?

The best way to find out if a PPP is right for you is through a free confidential evaluation. Simply complete a one-page questionnaire, attach your most recent Notice of Assessment and send them to us. We'll do analysis, send you a report and discuss the findings with you. You then decide what to do.

Here is the process in more detail.

Evaluation

Step 1: Request a personalized report by completing a one page Questionnaire (click for a fillable PDF) and emailing it to moc.ytivexat|ofni#moc.ytivexat|ofni. Please include your preferred phone number and your most recent Notice of Assessment from the Canada Revenue Agency (contains additional data used in the calculations).

Step 2: Review the findings and ask questions. You choose whether to meet

  • in-person at our office
  • remotely screensharing through your computer, or
  • by phone with a printout at hand

Implementation

When you're ready to proceed, you get your Personal Pension Plan with iA Financial Group through us.

You complete and submit the Information Form (click for PDF) which allows the INTEGRIS Compliance team to prepare the enrolment documentation used to register your plan with the Canada Revenue Agency (CRA) and the Financial Services Commission of Ontario (FSCO).

INTEGRIS uses the Information Form to prepare enrolment documentation and a cover letter which explains the purpose of each document and where you sign.

You sign the documentation, which we return to INTEGRIS. INTEGRIS then sets up your Personal Pension Plan.

Your Next Step

To proceed or find out more, simply contact us.