Pension Options

Benefits and Drawbacks of each option in nutshell:

  1. Pension Option:  Guaranteed income for life, indexed to inflation, minimal survivor benefits (if any), creditor-proof, no income flexibility, after income has been established.
  2. Commuted Value Option:  Lump sum, reduction to retirement income due to tax implications of this option; control over investments, estate preservation. There are different age restrictions with different pension plans, locked-in portion may not start until age 55.
  3. IPP Option:  100% Tax free transfer, 100% survivor benefits, higher contribution rates, tax deductibility for set up costs, contributions and maintenance fees to the corporation; access to surplus, control over investments, creditor protection and may more.Although this option may sounds like “too good to be true”, it comes with some requirements that potential candidate would meet. All IPP’s are subject to CRA and Provincial approvals and should be carefully explored trough knowledgeable financial professional.