Retirement Planning Flashcards
Canadian Pension Plan Basics
- everyone over age of 18 in Canada pays into it
- 5.95% Employees / Employer portion
-Stops no matter what at age 70
-Contributions are based on salary “pensionable earnings”
-Minimum level aka Yearly Basic Exemption (YBE) is frozen at $3,500
-The yearly maximum pensionable earnings (YMPE) is adjusted each Jan based on increases of average wage
CPP CONTRIBUTION RATES:
2023: YMPE: $66,600, YBE: $3,500
SO Pensionable Earnings = (66,600-3,500) = $63,100
Employee contribution = 5.95% x $63,100 = $3,754.45
Employer contribution = 5.95% x $63,100 = $3,754.45
CPP Plan Benefits
- Disability benefits
- Retirement pension
- Survivor Benefits - death benefit ($2,500)
- Post-Retirement Benefit
CPP as early as age 60 and as late as age 70
-Reduced by 0.6%/mo (max 7.2%/year) if started before age 65
-Increased by 0.7% per month after age 65 (max 8.4% per year)
-Retroactive payments only up to 12 months
What keeps a record of your CPP earnings and contributions over the years?
Pension Credits
CPP sharing example:
Pat and Jean have been living together in a common-law relationship since 1979. They are both over 60 and both receive a CPP retirement pension.Jean’s monthly retirement pension is $400. Of that, $100 is based on income earned before moving in with Pat; this amount will not be affected by a pension-sharing arrangement. The other $300 is based on income earned during their relationship.
Pat was not working before this relationship. Pat’s monthly retirement pension of $550 is based entirely on income earned while living with Jean.Their pension payments, added together, total $950.
After subtracting the portion of Jean’s pension that is based on income earned before moving in with Pat ($100), their “shareable” pension amount is $850. With pension sharing, they would each receive half of $850, or $425. In addition to the $425, Jean would also receive the $100 that is based on earnings prior to this relationship with Pat. Jean’s total monthly CPP payment would be $525, while Pat’s would be $425.
Their T4 slips will show the amount each received during the previous year and will be used when calculating their income tax.
What are your three options with leaving an employer pension after it’s been vested for 2 years (min req)
- Take a deferred pension
- take pension funds to another pension plan (if new employer agrees)
- transfer funds to a LIRA
What is commuted value?
lump sum present value of your expected future pension plus benefits
What are your 3 retirement fund options?
- a LIF
- LIRA fund
- use funds to purchase an annuity
What are IPPS?
-IPPs offer best savings solution for ppl over 40 earning more than $100K / yr
-creditor proofing
-higher cont. limits
-guarantee an income at retirement (cannot be collapsed unless critical sitch prior)
- ALL IPP conts, fees etc made by a corp on behalf of key person, fully tax deductable to corp and non-tax benefit to employee
DPSP - deferred sharing profit plans
- are not locked in
- offer employers flexibility
-do not increase payroll taxes
-tax deductible for employers
What is the 3 Year Attribution Rule for RRSPs?
-if your spouse withdraws funds from their spousal RRSP within 3 calendar years of the other spouses SPL contribution, the withdrawal is treated as income on the contributing spouses tax return
-If after 3 years vested the withdrawal is considered income on the receiving spouses tax return
3 year rule does apply if:
-marriage breakdown
-death
-either spouse becomes non-resident
-money transferred to an annuity
RRSP deduction limit calculated by?
18% of “earned income” for preceding year LESS “pension adjustments” (RPP) LESS “past service pension adjustments” PLUS any “” reversals, Plus previous unused room
2023 max: $30,780
Withholding tax rates for RRSPs
- $0-5000 = 10%
- $5001-15000 = 20%
- > $15000 = 30%
What is a Pension Adjustment?
(PA) is an individual’s total pension credits for the year with a specific employer.
What does Pension Adjustment reduce?
An individuals PA in a year reduces the maximum amount that they can deduct for RRSP contributions the next year
- PA = total pension credits
- PA is ONLY used for DBP - PA = {(9 x benefit earned) - $600}
Formulas for Pension Adjustments (there’s 2)
For DBP: PA = {(9 x benefit earned) - $600}
For DCP: PA = Employer + Employee Contributions
*There is no negative PA, if negative number exists the answer is nil
What is Alternative Minimum Tax
It prevents high income earners and trusts from paying little or no tax as a result of certain tax incentives, including claiming certain tax deductions and earning Canadian dividends and capital gains
What type of retiring allowance does not qualify?
Unused vacation days do no qualify as a retiring allowance
- termination pay and unused sick leave credits do
Two benefits of RRIFs
- growth of investments beyond age 71
- deferral of tax on income earned until money is withdrawn
- no maximum withdrawal limits
- once converted to RRIF user will have until Dec 31 of following year to make first withdrawal (no min in first year RRIF made but minimum amounts every year following)
What is the RRIF “prescribed factor”? (qualifying RRIF / 1993)
- RRIF minimum calculation
PF = 1/(90-age) with age being age of person Jan 1 of the year.
Eg: Marc 1, 2022 Donna turned 70. She converted her RRSP two years ago (2022)
Starting in 2015 all RRIFs use, which RRIF Factor? (non-qualifying RRIF 2015)
- “new factors” (chart of ascending rates) AKA non -qualifying RRIF
What type of RRIFs (qualifying or non-qualifying) can use the spouse or common law partners for calculating the prescribed factor?
BOTH - qualifying and nonQ can use the spouses age
- it can give a lower minimum withdrawal amount using the younger persons age
What is a LIF Life Income Fund?
-Essentially a RRIF but with a minimum AND maximum withdrawal amount
-min by income tax act and max based by province
-income stream until age 80, then converted to annuity in BC
-LIF and LRIF are almost same thing except at age 80 a LIF turns into an annuity, LRIF does not
What is a LRIF?
-Locked - In Retirement Income Fund
-Holds locked in pension money
- more flexible than LIF
-no maturity dates
What is a LIRA? Essentially a locked in RRSP…
Locked In Retirement Account
-designed to accumulate retirement savings
- like an RRSP but money is locked in
-designed to accumulate retirement savings
Deferred Profit Sharing Plan (DPSP) Tax facts:
-Employers conts are non taxable benefits
-income/growth tax sheltered in plan
-benefits and payments taxable to recipient
GIS exemption for working individuals
- $5,000 exempt no matter what and then 50% of the next $10,000 max
Eg: $18K income, $5K exempt… $13K left… but only $10K of $13K eligable.
$5K = (10,000 x .5) = $10,000 total exempt
Say income was $12K for year: $5K (7000 x .50) = $8,500 exempt
(12K - 5K = 7K…7K x 50%)
Canada Child Benefit (CCB)
- monthly, non-taxable benefit
Amount received is based on childrens age and number you have plus your adjusted family net income from previous year
-its simple
-tax free
-generous
-targeted to those who need it most
Child Disability Tax Credit (CDB)
- ## $236/mo
Employment Insurance Benefits (EI)
- if you lose a job you collect regular benefits
- maternity leave is parental benefits
- illness is sickness benefits
- compassionate care benefits for children - for those with ill family member 35 weeks (under age 18)
- fishing benefits - those who cannot fish at a time
- family care - 15 weeks over age 18
What is an EFA?
Eligible Funeral Arrangement
-funds someones funeral services
What is an RCA?
-Retirement compensation arrangement allows an employer makes contributions to a person aka custodian
Refundable Tax:
-contributions from employer to custodian are taxable
Distributions:
- all RCA dis are taxable
Refundable Tax
Pooled Registered Pension Plans (PRPPs)
-Operates like a DCP except it allows assets from multiple employers to be pooled
-low cost option
-more people can benefit
-portable
-need to report pension adjustment
What is YMPE?
Maximum salary amount you can calculate CPP contributions on
- is the the earnings ceiling for the calculation
What is YBE?
-CPPs yearly basic exemption amount. It is always $3,500
CPP Contribution Formula =
CPP contribution = (YMPE - YBE) x CPP Rate
= ($66,600 (2023 amount) - $3,500 (always this amount)) x 5.25 cpp rate
Who pays CPP?
50% Employer (5.25%) and 50% Employee (5.25%)
IF SELF EMPLOYED YOU PAY BOTH - look for clues like
-“net of expenses they earned”
-“self-employed”
RPP Calculations
Benefit amount (could be an average of years or given) x years in Defined Benefit Program
How to calculate Earlies Retirement Age with Unreduced Pension Benefit
Age = (Age when employee joined plan + qualifying factor) / 2
= earliest age for unreduced early retirement benefit
Contributions to a Defined Contribution Plan are…
- Employers cont are tax-deductible and are not a taxable benefit to plan member
- Employee conts are tax-deductible the year they are made
Calculation for a Defined Benefit Pension Plan (DBP)
PA = {(9 x benefit earned) - $600}
Calculation for a Defined Contribution Pension Plan (DCP)
PA = Employer = Employee Contributions
PA (pension adjustment) and PSPAs (past service PA) do what?
Reduce the amount a member can contribute to their RRSP in current year
2023 RRSP Cont Limit Worksheet:
- 2023 RRSP $ Limit: $30,780 2.
Calculate 18% of earned income for the previous year: - Use the lower of 1 or 2
- Less any Pension Adjustment (PA) for the previous year
- Less any Past Service Pension Adjustment (PSPA) for the current year
- Add any pension adjustment reversal (PAR) for the current year.
- Equals current year’s RRSP contribution limit
- Add any unused RRSP contribution room from all previous years
- Equals total RRSP contribution limit
- Add $2,000 life time allowable over contribution11. Equals Maximum allowable contribution
QUESTION: Calculate DBP Pension Adjustment
Judy, a member of her company’s DBPP, is entitled to a flat pension benefit equal to $25 per month for each complete year worked. Calculate her pension adjustment based on this information.
First calculate the benefit earned:
12 months × $25 = $300
Second calculate the PA:
PA = (9 × $300) – $600 = $2,100
CLUES: If you need a Pension adjustment there are two formulas, one for DPB and one for DCP. DCP is easy, just add employee and employer… DBP is the weird formula with 9 and $600…
When asked about solving Pension Plan and PA questions what should you closely look for?
- is it a DCP or DBP?
-how many years in service
-have they reached the employment length requirements to be eligible for plan
-how many years have they been IN the plan - what year are they asking you to solve the PA? Remember the PA is always from the year PRIOR (previous years earnings)… if they are asking for 2021 PA, use 2020 salary.. make sense :)
Calculate MAXIMUM Amount someone can cont. for RRSP in given year
QUESTION:
Todd is an IT Specialist who belongs to a registered pension plan offered by his employer. His earned income for 2019 was $52,000, for 2020 was $55,000, and in 2021 is estimated to be $59,000. His pension adjustments reported on his 2019 and 2020 T4 slips, were respectively, $2,500 and $2,850. Ignoring any unused contributions or overcontributions permitted, calculate the maximum amount Todd can contribute to his personal RRSP for a deduction on his 2021 tax return.
RRSP Contribution Room:
Current contribution limit, which is the lower of, 18% previous year’s earned income or the dollar limit ($27,830 for 2021).
+ Current year’s PAR
– Previous year’s PA
– Current year’s PSPA
= Contribution Room
+ Carry forwards
= Total RRSP Contribution Room
In this case:18% x earned income from 2020; max of $27,830
18% x $55,000 = $9,900
– Previous year’s PA – $2,850
Contribution Room = $7,050
What’s one way to lower your RRIF payments?
- use your younger spouses age
How is a Pension Benefit Income calculated?
PB = Benefit % x Years of Service x Earnings
PB is taxable income
What is the contribution limit for a DPSP?
The lessor of 18% income or 1/2 the dollar limit (roughly $16K)
CHOOSE THE LOWER OPTION
How long do you have with an RRSP turned into a RRIF at age 71 to make your first withdrawal?
- until year end of 71 year, start withdrawing in your 72
By age 95 what percentage of funds must be drawn from your RRIF?
20%
How much of your RPP can you rollover to your RRSP?
$2000 for each year or part year of service before 1996
If you are doing a cash flow statement make SURE you use AFTER TAX DOLLARS
Multiply by the tax rate and THEN remove expenses!
What are some things to consider with refinancing your mortgage?
- Would you pass the new stress test rules, this is required to RE FINANCE TOO ?
- Qualification rate: spend max of 32% gross income on housing and 42% total loan values
- Credit score: minimum 680
- Down payment required: you need to fund DP with your own funds, anything under 20% requires default insurance purchased as well and you cannot buy a house over $1M with default insurance requirements
When is the mortgage stress test required?
- when you’re refinancing your mortgage
- if you’re trying to take out a secured loan
- if you’re wanting to change mortgage lenders
What is the calculation for reduced CPP benefit?
65 and under
0.6% per month or 7.2% per year to TAKE EARLY
What is the calculation for increased CPP benefit?
65 and older
0.7% per month OR 8.4% per year to DELAY
If Kathy earned $52,000 and got 2% average for DPB, what would be her pension adjustment?
- 52,000 x .02 = 1,060
- DBP factor equation: (9 x benefit amount) - 600
- (9x 1060) - 600 = 8,940 PA
Taxes on Annuities are?
If the Annuity is purchased with regular after tax earned funds only the interest portion goes on your taxable income
If they are purchased with pre tax dollars the whole amount goes on taxable income
Who contributes to DPSPs?
ONLY EMPLOYERS - it can vary based on the corps earnings too. You may be able to have a say on how it’s invested…
Employees cannot contribute to DPSPs
When must minimums from your RRIF start?
The year AFTER it converts. The latest age you can covert it is age 71 and you must take your first payment by Dec 31 of your 72 year.
DBPP Pension question example*****
In 2020 Ben earned $48,000 and his benefit entitlement was $825. What was the max contribution Ben could make to his pension this year?
- Find the max = 48000 x .18 = 8640
2 Find his DBP adjustment:
(9 x 825) - 600 = 6825
- Minus Max from his DBP Adjustment:
8640 - 6825 = 1,815 MAX contribution Ben can make
What working class people are EXEMPT from making CPP payments?
Migratory, casual (say a babysitter) and religious orders
Anyone making more than the YBE of $3,500 must contribute to CPP
Some facts of DPSP
- they do not need to be registered with CRA
- only employer can make contributions
- employers conts based on employer profits annually with a max
- savings are tax sheltered
- when employee leaves they can:
1. transfer to rrsp or rrif
2. buy and annuity
3. take a lump sum cash value
CPP rules when split with spouse are..
Must be split 50/50
Based on length of union
What is an Annuity?
Simply put it is a stream of income
Can be either fixed, term or on life of one of more annuitants
Insurers are only ones who can offer life annuities, others offered through banks, insurers and investment dealers
What are some annuity features?
Commutable -
Indexing
What does Earned Income entail (for RRSP)
- Net employment income
- Unemployment benefits other than EI
- Net Rental Income (rental income less expenses)
- Taxable Support Payments (spousal, child no unless prior to 97)
- Net Business Income (Income less losses) - dividends do not create room
- Research grants
- Royalty Income
- CPP Disability Benefits (other CPP benefits no)
- Retiring Allowances excluding after 1996
How much RRSP calculated?
18% of earned income to a max of 2023 limit (30Kish), whichever one is lower
RRSP withholding tax summary:
0 - 5000 = 10%
5001-15000 = 20% (6000 x 20% = 1200 (no graduated amount)
15001 < = 30%
Repayment for HBP vs LLP?
HPB = 15 years (1/15 of total amount borrowed) - no amount due in year of withdrawal or year directly after withdrawal. Eg withdrawal in 2018, first payment due in 2020 PLUS 60 days into 2021 (since it follows the RRSP contribution schedule)
LLP = 10 years (1/10 of total amount borrowed) - repayments begin earlier of 5th year after first withdrawal OR no longer enrolled in qualifying program (whichever is first)
LLP
Max amount is 10K per year or 20K total, spouse can double that for other spouse
Group RRSPs are
-low maintenance
- usually have some element of matching
- low cost way for employers to offer employees a savings plan
Differences between RRSP and Deferred Profit Sharing Plan (DPSP)
DPSP is another employer sponsored retirement savings arrangement
Similarities:
- Employers make tax deductible contributions
Differences:
- in a DPSP only the employer can contribute
- employees who own 10% or more of company cannot participate
- contribution limits 18% or 50% of max limit / equal to RRSP deduction limit)
- provides a PA to employee
-must vest 2 years
-frequent technique is employer uses their own shares to fund plan
- amounts paid out are taxable as “other income”
- you can rollover to an annuity or other registered plan, no rrsp room required to do so
What are your withdrawal options for DPSP?
- Cash fully taxable
- Annuity
- Other RPP or RRSP
What is the RRIF formula and when do you use it?
RRIF Amount / (90 - age at Jan 1)
for applicants under the age of 71, for both qualifying and non-qualifying RRIFs
Why would you switch before age 71? To reduce withholding taxes.
Another reason is for income splittingha
What are RPPs?
What are the qualifying factors for pensions (RPPs)?
(Starting Age + Qualifying Factor) / 2
When might we see a commuted value of a pension?
- Death of Pensioner - given to spouse or bene
- Divorce
- Leaving Pension early
What is Maximum Tax-Deferred Transfer Value?
max value that can be rolled over to LIRA from a pension, it uses RSP room
What might permit the unlocking of DCPs and DBPs?
- Small amounts
- Financial Hardship
- Reduced Life Expectancy
- Becoming Non-Resident
- Death
- 50% unlocking
What account do Pensions transfer to?
LIRAs , which are almost identical to RRSP but locked in.
Some LIRA provisions
- NO HBP or LLP withdrawals
- no contributions, only funded from previous pension and no longerW
What happens when a LIRA matures?
It is turned into a LIF, an annuity, LRIF or combo
- must be done dec 31 of 71st year and has minimum and maximum withdrawal limits
Specified Pension Plans are what?
SPPs, voluntary defined contribution plans.. good for people wanting a more professional asset management and wanting to switch to annuity at retirement
What is an IPP?
Individual Pension Plan (3rd type of RPP)
-SMALL SCALE DB with a maximum of 3 members
- usually used in small businesses that have good cash flow, incorporated, cash on hand, age 45 or older, owners dedicated and planning for retirement
-business is sole contributor
What are the 3 RPPs?
DBP,
DCP
IPP
What is the maximum funding level for DB plan based on?
Money Purchase Limit of the year (slightly higher than RRSP limits at $31,500 roughly)
What age do IPPs not work under?
Under age 45
When can an IPP be used?
Rare and specific sitations
Small business owners who meet the target profile
- very complex so has to be worth it
What are Pooled Reg Pension PLans (PRPP)?
Very similar to DC plan but more flexible and portable
Who are PRPPs pensions designed for?
- those without one regular employer
- those who work for employers too small to implement a plan
- self employed
PRPPs are
more attractive than RRSP but easier to manage than an RPP
-employer has no fiduciary duty
-
RPP pensions can be split with spouse at?
Any age with spouse and not based on union length
RRIFs can be split with spouse at age?
65
What pensions create PAs?
DC
DB
DPSP
PRPP
Pension Adjustments affect which year of your RRSP cont room?
THE YEAR THEY ARE MADE IN
RRSP conts are the following year
How can you know what next years RRSP limit will be?
By looking at this years Money Purchase (MP) limit (it runs a year ahead as it impacts the current year)
Do TFSAs have creditor protection?
No, unlike RRSPs
What are the lifetime maxes per bene for RESP?
$50K and no contributions past bene age 31
How are CESG grants done?
20% per annual grant to a max of $500, you can buy back grants 1 year at a time… to a max of $1000 in CESGs as buy back and current year
RDSPs
$200,000 lifetime max contributions, no annual maximums
- Two type of Gov’t Grants:
1. CDSG matches contributions based on family net income (to a max of $1000 per year)
2. for lower income families 300% matched
- no grants paid after age 49
- maximum lifetime gov’t grant is $70K
What is the Canada Disability Savings Bond?
What is a DAP?
Disability Assistance Payment (one time thing), substantial withdrawal triggers a CDSG and CDSB
What is a RCA?
- provides savings for higher income people well beyond an RRSP
- extremely complicated, limits useability
-big disadvantage is they attract a 50% withholding tax
What are some tools to use in the estate planning goals?
- Wills
- holding assets jointly
- gifting
- use of corps
- use of trusts
- insurance
- benes on RRSPs etc
- life insurance
- POA
- Living wills
- Reg agreements
What does it mean to die without a Will?
To die “intestate”
Some concerns with holding assets Joint
- no land can be sold unless all ppl agree
- joint can access 100% of bank accounts
-joint assets subject to creditors of either party
What is Tenancy In Common?
- much like joint tenancy but there is no right of survivorship
- these assets will be subject to probate tax and go through the will of the deceased co tenant not to the other “tenant in common” owner
Define Settlor, Trustee and Beneficiary
Settlor = person in trust agreement who owns the asset and transfer legal title of property
- Trustee has instructions on how to use the property to benefit the
- Beneficiary
Can the Settlor and Trustee be the same person?
Yes
What are trusts called when you’re alive?
Living Trust
Inter-vivos Trust
Trusts are:
- their own legal entity
- can file its own tax return
- with regards to taxes and trusts - when an asset it moved to a trust it’s Fair Market Value (ACB) is equal to its value on the day it transferred into the trust, not the day it was transferred OUT of the trust.
ACB on asset is from day transferred IN not OUT
Trustees can be one of either:
- Discretionary Trustees
- Non - Discretionary Trustees
How do you calculate the taxable capital gain in a trust?
Tax CG = 50% x (FMV at transfer date - ACB)
What is the primary purpose of an Estate Freeze?
Freeze all or part of the value of appreciating assets at their current value so that future growth accures to future generations
the actual benefit is the growth will not be taxed in the hands of the parent
Benefits of an IPP
- Higher contribution rates than RRSP limits, allowing Steve to accumulate more before retirement
- IPP offers a defined and guaranteed income level in retirement that a DCP cannot
- Offers to index his retirement income, whereas a DCP cannot
What should you mention (but maybe not include) if a question asks a clients max RRSP contribution amount?
It would be wise to state the amount and mention they do have an additional $2,000 over contribution amount.
Can a loan used to fund an RSP generate a tax deduction?
No - funds contributed to an RSP already generate a tax deduction in the year they are made, therefore the interest is not tax-deductible as well.
What is the Qualifying Factor? And what is the formula?
Qualifying Factor is the youngest age someone an receive their full pension. AKA earliest age you can receive an “unreduced pension”.
Age + Years of Service = Qualifying Factor
OR
My personal preference:
(Qualifying Factor + Age started in job) / 2 = Youngest Age
When calculating an RRSP, what is considered “Earned Income”
- Net Employment income
- Net income earned from a business, including a partnership
- Net rental income from real estate
- CPP disability payments
- Spousal Support (not child)
MINUS:
_ business losses
- spousal support paid
- Loss from real estate
Income sources that DO NOT apply are:
- investment income
-pension income
- retiring allowances
-death benefits
- limited partnership income
- taxable capital gains
Where can severance pay go?
Into an RRSP - as long as their is contribution room available!!!
CPP quick numbers
0.6% < – 65 –> 0.7%
Max lower = 36% or 7.2%/year (5 years)
Max higher = 42% or 8.4%/ year (5 years
What is a 65 year old delayed their CPP $800 at 65 3 months?
= 0.7 x 3 = 2.1%
= 800 x 1.2% = $816.80
WHEN YOU DELAY OAS it is 0.6% PER MONTH on a go forward basis, to a max of 36% (it is the exact same as the premature withdrawal of CPP…..)
If you delay CPP does OAS and GIS get delayed too?
No you have to elect to delay OAS, GIS however goes with OAS and if you delay OAS you will not get GIS either
How much is OAS clawed back?
15% for each dollar over this amount - the threshold goes from like $88K - 130K in 2023 or something close to that, you will be given this number…
GIS is a ..
income based benefit
- if you are over $21K roughly you will not receive it
- ## OAS is not included in the calculation
how long do common law couples have to apply for credit splitting?
4 years
Legally married couples have no timeframe
Are GIS taxable income?
NO
OAS and CPP are taxable income
Flat Benefit Amount equation for an RPP is..
Amount = (monthly benefit) x (number of months) x (number of years)
What could render a will invalid?
- ## person lacks mental capacity
What is a hand written will?
Holograph
What is the word when you die without a Will?
To die intestate
How much is the CPP death benefit?
$2,500 flat payment.
What is another word for Probate?
Estate Administration Tax
WAYS TO HELP ACHIEVE A SHORTFALL OBJECTIVE FOR RETIREMENT
- spend less today / save more
- work longer
- more risk / new AA - this requires taking on more risk (have to be comfortable with this)
- reverse mortgage
- downsize home
- reduce expenditures in retirement
How do you get earliest unreduced pension age?
Earliest Retirement Age = (AGE of member when they joined the plan + qualifying factor number (given)) / 2
EG: 56 year old in plan for 26 years….
30 years old + 85 QF / 2
= 57.5 years old for earliest unreduced pension
IPP pros and cons
PROS:
- creditor protected
- guaranteed and defined income benefits in retirement
-Employer makes up any shortfall (responsible to)
- IPPs have higher cont rates than RRSPs resulting in higher tax sheltered savings
CONS:
- Leaves minimal RRSP cont room (no other retirement source)
- IPPs have higher costs and complexities
- More regulatory items - can restrict flexibility in retirement income planning
