• Personal Pension Plan (PPP)

The Personal Pension Plan – or PPP for short surpasses virtually all other conventional retirement savings methods. The PPP offers the stability of a defined benefit pension plan and is ideal for entrepreneurs looking for a better way to invest tax-deferred corporate dollars to supplement government benefits like CPP and OAS and non-registered savings. With the PPP, you can enjoy a “cream of the crop” pension plan similar to teachers and civil servants.


 PPP allows a member to contribute well in excess of the RRSP maximum limits, the advantages are two-fold: an ability to claim much larger tax deductions and an ability to compound more money in a tax-deferred account until retirement. As stated above one the greatest benefits of PPPs is building a larger retirement nest egg. The contribution limits are much greater through a PPP compared to an RRSP. Assuming a 55-year-old, he/she can contribute up to $40,610 to a PPP vs. the maximum RRSP contribution of $25,375. This creates greater corporate tax deductions and tax deferred compounding growth while in the plan.

The key advantage of the PPP design is that it provides flexibility with respect to the amount of contributions made each year: in good years, a business owner might utilize the DB (defined benefit) component of the PPP to tax-deduct as much as possible. In lean years, the same business owner may elect to save under the DC (defined contribution) component and reduce contributions to a mere 1% of salary. When business subsequently picks up again, the member could look back to the years where contributions were small and retroactively effect a “buy back of past service”, thus creating additional contribution room.

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