PERSONAL PENSION PLAN®
The Personal Pension Plan™ (PPP®) is a wealth accumulation and tax savings solution specifically designed for business owners, associations, franchise owners or incorporated professionals like accountants, consultants, dentists, doctors, financial advisors, lawyers and many more to accumulate significantly more in retirement savings and pay less tax than most Canadians.
BENEFITS
Shelter more income: With a PPP®, you can build up a bigger nest egg for retirement by increasing your payment levels yearly.
Asset Protection: Savings in a PPP® are safe from claims from trade creditors and also offer tax-free rollovers of existing RRSP assets, which protects all registered assets even more.
Tax deductions: With a PPP®, a person can deduct from their business income all investment, actuarial, administration, and trustee fees linked to their account.
Mitigate Market Losses: A PPP® allows the sponsor to make extra tax-deductible contributions each year to the individual's account if investments return less than 7.5% to ensure the pension plan is fully funded.
Contribution Flexibility: A plan lets members switch between Defined Benefit (1) and Defined Contribution (2) parts to adapt to business economy changes.
More investment options: you can invest in a wide range of non-traditional investment tools you can't use with an RRSP.
Options at retirement: Members can buy a life annuity, choose a monthly income by keeping the PPP®, or roll the funds into a locked-in or non-locked-in retirement vehicles
All choices must stay within the limits set by the CRA and the laws in place.
“A PPP®, similar to an RRSP, provides savings for retirement that are tax deductible.
However, PPPs can generate significant advantages beyond traditional retirement plans. A larger annual investment, the same tax-sheltered benefit – that’s where PPPs can make a difference.
That means higher contributions with the same benefits.”
A PPP® vs. IPP
An IPP offers Defined Benefit (DC) only and could provide an Additional Voluntary Contribution (AVC) side account.
PPP® is a combination registered pension plan that offers; Defined Benefit (DB) accruals like an IPP Defined Contributions (DC) and Additional Voluntary Contributions (AVC) plan.
IPP = DB only (potential for AVC)
PPP® = DB + DC + AVC
Advantage
PPP® since everything an IPP offers is already part of the DB component of the PPP®. You can contribute more towards your retirement than what's allowed with an RRSP/TFSA or an existing IPP. Coupled with the power of compounding, this accumulates to more significant savings when you retire.
An Individual Pension Plan (IPP) or a Personal Pension plan (PPP) is a defined benefit pension plan put in place through an incorporated company to provide greater retirement and tax benefits to certain individuals. We like to think of it as an “RRSP on steroids”, designed for people who own an incorporated business.
