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What are the benefits?

Since for this type of pension plan, the plan member and the employer are very often the same person, an IPP offers a number of benefits from both the member’s and the employer’s perspective.

Advantages for plan members

  • Plan funded by the company
  • Allows more money to be saved for retirement than an RRSP
  • Recognizes years of past service, increasing the retirement pension
  • Customization is possible: indexation of benefits, early retirement without reduction and bridge benefit
  • Assets grow tax-free up to retirement; possibility for assets to continue tax-free growth after retirement if pension benefits are drawn directly from the IPP
  • Assets in an IPP are exempt from seizure by creditors
  • Contributions to social programs (EI, CPP) are not applicable to money invested in an IPP.

Advantages for employers

  • Significant tax savings: contributions reduce company earnings
  • Assets in an IPP reduce shareholders’ equity, which can facilitate the sale of the company
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