Page 108 - A Canuck's Guide to Financial Literacy 2020
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Individual Pension Plan
An Individual Pension Plan is a employer sponsored defined benefit pension plan whose
goal is to provide a retirement benefit for “connected individuals” or “significant
shareholders” who hold at least 10% or more of ownership interest in a particular company
or corporation. This usually includes executives or incorporated business owners who run
their own practice such as dentists, doctors, lawyers, etc. earning at least $145,000+ in
annual salary. (2.5x the YMPE) An IPP is able to provide a enhanced benefit above of what
a traditional savings plan such an RRSP can due to it’s higher contribution limits.
IPP vs RRSP
An IPP has similar features to an RRSPs as they both provide tax deferred growth and
creditor protection but they different in how much you could contribute. An IPP provides
greater accumulation and has a higher contribution limit than an RRSP. Contributions into
an IPP increase by age and the closer you are to age 65, the higher the contribution room.
