A retirement solution for high income earners

For business owners and professionals, an Individual Pension Plan (IPP) may provide a solution to fund retirement income. Introduced in 1991 by the Federal Government, IPPs provide tax-deductible and tax-deferred contributions for retirement, including past service benefits and increased annual contribution room compared to RRSPs. Sometimes referred to as Personal Pension Plans, IPPs utilize a Defined Benefit funding formula which in simple terminology means that annual contributions must be able to fund a retirement benefit that is predetermined.

IPPs provide the following benefits:

• Ability to attract and retain key employees
• Guaranteed benefit regardless of market performance
• Deductibility of contributions as expenses for tax purposes for the employer
• Higher contribution limits than RRSPs in appropriate situations
• Potential for increasing contribution limits each year
• Flexible benefit options at retirement or upon termination of employment including annuity, locked in RRSP, Life Income Fund or Locked in RRIF

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