Organized by the GTA Accountants and Finance Network (GTAAFN) on June 01, 2023

Billed as the “Great Debate” between proponents of the PPP vs IPP, the debate turned out to be one-sided as the representatives of the PPP at Integris declined to take part to present their case. Three proponents for the IPP presented on behalf of the IPP.

Stephen Cheng from Westcoast Actuaries Inc. presented. Major points presented included:

• As far as registration with CRA there is no difference between IPP and PPP. Both are designated pension plans as defined in the Income Tax Act (ITA) & Regulations. So as far as the defined benefit components are concerned, maximum contribution and benefit levels are the same for an IPP as they are for a PPP.
• PPP is effectively an IPP with a Defined Contribution (DC) component. DC plans lose out to RRSP for younger employees. If an employee receives additional income equal to RRSP contribution, they are better off than DC contributions of the same amount.
• IPPs have the advantages of terminal funding when the member has reached retirement age and commenced pension benefits. These advantages are increases in benefits and significant extra tax-deductible contributions. PPPs can realize terminal funding as well if the DC component can be removed as the Canada Revenue Agency would not approve the application for a waiver of the designated plan status for purposes of terminal funding if there are still active members in the plan.

Lea Koiv of Lea Koiv and Associates presented. Major points presented included:

• IPP sponsors commonly have additional DC/RRSP so its false to say that only PPPs have this feature.
• IPPs are exempt from registration in Ontario and hence do not have to follow funding and registration rules.
• ITA does not require funding for IPPs.
• IPPs work well for accountants and other professionals.
• IPPs have advantages compared to RRSPs both for current service and past service contributions.

Jason Pereira of Woodgate Financial Inc. presented. His presentation was entitled “A Critical Review of Claims Made Regarding PPPs.” He suggested that claims made by Integris regarding PPP’s advantages over IPP’s are an example of a Straw Man Fallacy. A Straw Man Fallacy occurs when someone takes another person’s argument or point, distorts it, or exaggerates it in some kind of extreme way and then attacks the extreme distortion as if that is the claim the first person is making.

• An example of this is a chart prepared by Integris showing benefit levels being significantly higher on a projected basis for PPPs compared to IPPs. The example starts at age 16 through 65. This scenario is very unlikely to happen for a 16-year-old to implement an IPP or PPP, so example is misleading.
• RRSP compared to DC inside PPP. PPP is worse off due to fees applied to DC component.
• CRA is likely to disallow plans which give shelter for PPP death benefits continuing to young members under the plan. CRA have always been negative about including death benefits in registered pension plans.
• Insurance policies should not be included in registered pension plans.