Little Wealth Management Group - HollisWealth Burlington

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Individual Pension Plans – IPP just another acronym?

An an Investment Advisor specializing in developing IPPs, I am often asked to demystify this popular retirement strategy for professionals.   There are a few basic questions to see if IPPs are applicable to your personal situation:

  • Do you have a RRSP?
  • Do you have an annual income over $100,000?
  • Are you 40 years of age and plan to retire within the next 15 – 20 years?
  • Are you a professional with an incorporated business?

What is an IPP?

An IPP is a defined benefit registered pension plan with membership limited to an individual and spouse.  The annual retirement benefits funded by the plan are defined within the plan and are based on a percentage of your annual employment income To qualify an IPP must be registered with Revenue Canada and the employer must fund a minimum of 50% of the required contribution. The advantage of an IPP is the allowable contribution limit, which are typically much higher than what is currently available in a RRSP ultimately providing you with a significantly larger pool of retirement savings.

Other Advantages, to name a few:

  • Investment Choice – your participation in the investment decisions made by the IPP.
  • Creditor Protected -  for both employer and employee.
  • Surplus – any surplus stays in the general pension pool.
  • Income - Multiple retirement income options available.
  • Expenses – tax deductible to employer, and payable directly from IPP plan.
  • Retirement – typically age 65 but permitted as early as age 55, with deferral to age 69.


  • IPP funds are locked in.
  • Income Splitting, spousal RRSPs are not allowed, however, if the spouse is an employee of the company they can be enrolled in the IPP.
  • Start-up costs –  associated with establishing the Plan, Trust documents and registration requirements.  (There are significant additional tax savings that flow from an IPP which outweigh the start-up and maintenance costs of an IPP)

The above provides you only with a simplified overview of the IPP concept.  If you are interested in learning more about IPPs, or would like to have a financial check-up, contact me.

Please click here to read more IPP Frequently asked questions… 

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