IPPs at a glance

Individual Pension Plans

2023 Contributions at a glance

This table compares the projected future balance of an Individual Pension Plan ("IPP") to an RRSP for a business owner who maximizes contributions to either plan with T4 income. The table demonstrates the potentially higher plan value and more favourable outcome at age 65 with an IPP, thanks to a slightly higher contribution limit and more predictable income level.

Notes and Assumptions

Plan effective January 1, 2023. Based on a male living in Ontario with a birth date of January 1st. Connected person1 (but not related2) with T4 earnings of at least $175,300 since 1991 and has maximized his/her RRSP (personal not spousal) each year since 1991. Past service costs and projected annual pension includes past service from 1991 to 2022 inclusive. The Canada Revenue Agency (CRA) maximum pension is $3,506.67 for 2023 and for the purpose of this illustration, indexed @ 5.5 per cent per year thereafter. The results presented in this illustration were determined on a maximum funding valuation basis (e.g. the assumptions used are those prescribed under Section 8515 of the Income Tax Regulations). The use of other assumptions would likely produce different results.

The Qualifying transfer amount doesn’t consider the $8,000 PSPA exemption.

1 A connected person owns or is related to someone who owns 10 per cent or more of any class of shares of the company. 2 A related person owns or is related to someone who owns 50 per cent or more of the voting shares of the company.

This is for general information purposes only and should not be considered investment or tax advice to any party. Individuals should seek the advice of professionals to ensure that any action taken with respect to this information is appropriate to their specific situation. Manulife, Manulife Investment Management, the Stylized M Design, and Manulife Investment Management & Stylized M Design are trademarks of The Manufacturers Life Insurance Company and are used by it, and by its affiliates under license.

MK1676E 03/23

Tax, Retirement & Estate Planning Services Team

Tax, Retirement & Estate Planning Services Team

Manulife Investment Management

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