Is there a solution you can present to your client that would help alleviate portfolio decline and recoup lost wealth? The Individual Pension Plan (IPP) could provide solutions to existing clients as well as those who should be considering an IPP.
Existing IPP Client
Existing clients must have the IPP valued every three years to determine if there are sufficient assets in the plan to provide the annual pension earned to date. At the time of valuation the actuary determines if there is a shortfall or a surplus in the Plan. If there is a shortfall then any additional contributions determined by an actuary and approved by CRA, can be contributed to the pension plan and deducted by the employer. This situation permits plan members to secure their retirement against market down turns and provides corporations a tax deduction opportunity. Any deficit in an IPP may be funded over five years providing the sponsoring company some flexibility. Recently we have been approached by clients who wish to move up the date of their triennial valuation in order to enhance tax deductions for the company while ensuring that the member’s IPP is poised for stronger markets. Clients are looking for a way to make additional contributions into the IPP to strengthen the member’s portfolio by being able to add investments into the plan at lower prices. We determine the merits of producing an earlier valuation on a case by case basis.
New IPP client
The ability to have a detailed conversation around long‐term planning and retirement strategies, incorporating concrete ways to enhance wealth, allows the advisor to present a unique and positive approach to wealth management even in difficult investing environments. New IPP clients can enjoy the benefits of being able to top up their retirement assets in down markets. In most cases with past service the member’s RRSP can be rolled into the market at a time when they have no ability to top up.
For more information on Individual Pension Plans please contact your GBL representative or one of our regional offices.
