Individual Pension Plan (IPP) Advantages & Disadvantages vs. RRSP

• Advantages of IPP vs. RRSP

• Disadvantages of IPP vs. RRSP

Advantages of IPP vs. RRSP

• Higher contributions than an RRSP for people who fit the age and earnings criteria;
• Past service funding opportunities;
• Additional contributions at retirement (terminal funding);
• Better creditor-protection;
• Higher investment standards - quality and diversification requirements;
• Deficit can be made up with more tax-deductible contributions from the employer (the targeted rate of return is 7.5% per annum so deficit can arise if rate of return is less than 7.5%).

Disadvantages of IPP vs. RRSP

• No access to funds while employed and a member of the plan;
• For plans that are registered with the Federal or the provincial pension regulatory authority, there are minimum contribution requirements each year.  Click here for further details.
• Plan assets must be used to provide pension amount defined by the plan so benefits are locked-in;
• Higher administration costs and expenses; and
• Excess actuarial surplus may affect ability to make contributions.