Two strategies Corporate Vs Pension/Client Asset Range
The Bank of Canada defines “A defined-benefit pension plan provides plan members with a predetermined level of pension income when they retire—the exact level depends on variables such as income and years of plan membership—and employer sponsors tend to assume a large proportion of the risk of meeting that benefit. This contrasts with defined-contribution plans, where employer and employee contributions are defined (often as a fixed percentage of employee income), and employees typically assume most of the risk of achieving a certain level of pension income. In Canada, defined-contribution plans account for a greater number of plans, but defined-benefit plans account for a much larger share of plan members, reflecting the fact that many of the largest plans are of the defined-benefit type.
Canadian business owners are often presented with a “Corporate” solution to save for retirement
Information provided by INTEGRIS Pension Management Corporation
Information provided by INTEGRIS Pension Management Corporation
Information provided by INTEGRIS Pension Management Corporation
Information provided by INTEGRIS Pension Management CorporationIs there another way to save for retirement?
YES, and I can help through the use of a Personal Pension Plan (“PPP”)
•PPP = Registered Pension Plan (Income Tax Act section 147.1)
•All contributions give Corporation an expense
•All growth is tax-sheltered
Instead of exposing assets to potentially 6 different taxes, the PPP customer only has to pay tax once, in retirement, and only on the taxable income paid by the pension plan.
Even that taxable income could be significantly reduced if pension income splitting applies, or if as a non-resident, the client lives in one of the 100 countries that only apply a 15% tax rate to the annual pension benefit.
Both strategies allow the business owner to save money for retirement, however, the Pension strategy unlocks a series of beneficial tax consequences that preserves capital for its intended use (a steady source of income in retirement) instead of exposing it to multiple taxes.
Colleen Lemieux is a Wealth Advisor with Aligned Capital Partners Inc. (“ACPI”). The opinions expressed are those of the author and not necessarily those of ACPI. This material is provided for general information and the opinions expressed and information provided herein are subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on the information presented, please seek professional financial advice based on your personal circumstances. ACPI is a full-service investment dealer and a member of the Canadian Investor Protection Fund (“CIPF”) and the Canadian Investment Regulatory Organization (“CIRO”). Investment services are provided through ACPI (or) Lemieux Wealth Management, an approved trade name of ACPI. Only investment-related products and services are offered through ACPI/(or) Lemieux Wealth Management and covered by the CIPF.