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Individual Pension Plan (IPP) vs Personal Pension Plan

Posted under: Business Owners, IPP

GBL has received inquiries regarding the Individual Pension Plan (IPP) and a competitor’s offering called the Personal Pension Plan.  The purpose of this document is to outline the similarities and differences and to debunk any myths surrounding one option over another.

It is important to note the Defined Benefit (DB) component of the Personal Pension Plan which is in most cases the only component of the Personal Pension Plan that is utilized, is ultimately an IPP and it is therefore registered as such with CRA. There is no legislation in the Income Tax Act (ITA) that refers to a Personal Pension Plan. The IPP legislation is what governs the Personal Pension Plan.

In reality, by choosing the Personal Pension Plan, you would pay significantly higher fees for something you most likely do not need and will not use.


The Personal Pension Plan is marketed outlining several benefits but based off conversations we’ve had with advisors and clients the Personal Pension Plan’s promoters frequently fail to mention that many of these are also offered inside an IPP.

Item IPP Personal PP
Higher ongoing contributions than regular RRSPs
Additional company contributions for past service
Transfer in RRSP funds as Additional Voluntary Contributions (AVCs)
Investment management and plan related fees are tax-deductible to the company
Ability to make tax-deductible top ups when plan has a deficit
Terminal Funding options
Creditor Protected

DIFFERENCES – How Significant Are They?

The following table outlines the differences between the Personal Pension Plan and the IPP.  You will notice that many of the differences are not differences at all and favour the IPP.

Item IPP Personal PP Advantage
Fees GBL has a flat fee structure which is $1,500-$1,800 for a single member IPP depending on province of residence. Offers multiple fee structures which are all considerably higher.  The fee structure can have both a flat fee, which is higher than GBL’s, and an additional fee based on the percentage of assets.  This can amount to 3 – 4 times more in Personal Pension Plan fees than GBL’s IPP fees.  IPP
Complexity One account for the IPP even with multiple members.  Much easier to reconcile and explain to clients. Up to 3 accounts for each member. In the case of a two member plan, that would mean 6 separate accounts. Can also further complicate a portfolio review. IPP
Flexibility of Contributions Deficit and annual funding not enforced for Connected member plans in the majority of provinces. Can toggle between DC and DB.  Unlike with the IPP, current service is eliminated during DC years and lost DB contribution room cannot carry forward to be used in future years.  This renders the Personal Pension Plan’s DC provision more harmful than beneficial in most provinces.  This means that if you elect the DC in any given year, you won’t be able to get the additional contribution room that is created with the DB plan. IPP
Plan Administration GBL’s in-house actuaries handle all administrative functions.  All IPP providers operate similarly as this provides the best customer service for clients. Without in-house actuaries, the provider handles some administrative functions and outsources others.  Being the only firm offering the Personal Pension Plan provides less portability to the plan should they cease to provide administration. IPP
Age Requirement The IPP is advantageous after age 40.  We recommend our clients save fees and use an RRSP up to age 40.  This is the same as using a DC plan prior to age 40 with the added benefit of saving the client substantial annual fees charged by the Personal Pension Plan. Can use the DC component before age 40.  Max contribution is the same as an RRSP with no additional contribution room, but client would incur additional fees. IPP
Investment Options Any pension-eligible investments. Cannot hold more than 10% in a single security Same should hold true.  Same
Locked-in Nature All Past Service transfers and ongoing contributions are locked in, except for AVCs. Most provinces offer unlocking of portion as high as 100% at retirement Same as IPP. Same

In looking at the differences between the 2 structures, there is no objective advantage to the Personal Pension Plan offering. The pricing is significantly higher in order to have a Defined Contribution option which is rarely used, the Actuarial service is external which can create delays and disruptions to the service, and the use of multiple accounts can create confusion and unnecessary complexity.

Founded in 1995,GBL is a leading provider of retirement, health, and cross-border solutions for business owners across Canada. With offices in Calgary and Toronto, we have served 6,000+ clients, have 3,000+ Financial/Investment Advisors in our network, actively manage 2,000+ IPPs and RCAs, and have created 1,000+ HBPs and 3,000+ FMVs. We’re known for our industry leading client service and administration, as well as our top-notch actuarial group. Contact us today at  [email protected] or 403.249.1820 and follow us to learn how we can help Build Your Future.