Individual Pension Plans (IPPs and PPPs) for Doctors (2025) + HOOPP
by David Wiitala using ChatGPT Deep Research - general information only, not to be used as advice
Introduction: Retirement planning is a critical concern for Canadian physicians, especially those who run their practices through professional corporations. Two advanced retirement tools have gained popularity among incorporated doctors: the Individual Pension Plan (IPP) and the Personal Pension Plan (PPP®). Both are types of registered defined-benefit pension plans that allow higher, tax-deductible contributions than a standard RRSP, but they differ in structure and flexibility. This report provides a comprehensive comparison of IPPs and PPPs (particularly the PPP offered by INTEGRIS) using 2025 data, with a focus on benefits, drawbacks, optimal starting age, and recent developments. It also includes case studies to illustrate when these plans are advantageous or not, and a 2025 update on Ontario doctors’ new option to join the HOOPP (Healthcare of Ontario Pension Plan). The goal is to offer practical guidance for mid- or late-career Canadian physicians evaluating these retirement planning tools.
Understanding Individual Pension Plans (IPPs)
An Individual Pension Plan (IPP) is a defined benefit (DB) pension plan established by a corporation (often a professional corporation or small business) for the benefit of one member, typically the owner-employee (e.g. an incorporated physician). It promises a set retirement benefit based on factors like the member’s salary (T4 income) and years of service. Key features of IPPs include:
Higher contribution potential (especially after age 40): IPPs allow substantially higher tax-deductible contributions than RRSPs, particularly for those over age 40. For example, pension rules enable contributions that grow with age – at 40, an IPP may only allow roughly $2,500 more than an RRSP, but by age 50 the IPP room can exceed RRSP room by over $18,000 per year. This is because contributions are calculated actuarially to fund a promised benefit, rather than being capped at 18% of income as with RRSPs.
Past service contributions: An IPP can include service from previous years of employment. When setting up an IPP, a physician can “buy back” past years of T4 income (even back to 1991) with a one-time lump-sum contribution (GFS Sponsor Access - Individual Pension Plans (IPPs): Supersized Retirement Plan). This allows a large initial tax-deductible contribution if the doctor has been incorporated and drawing a salary for many years prior to establishing the plan.
Tax-deferred growth: Like an RRSP, investment growth inside an IPP is tax-sheltered until withdrawal. However, IPPs typically permit broader investment options than RRSPs. As a pension trust, an IPP can invest in asset classes that RRSPs may restrict (e.g., certain real estate or limited partnerships).
Creditor protection: Assets in an IPP are generally protected from creditors in the event of bankruptcy or lawsuits. This can be an important benefit for physicians concerned about malpractice or business liabilities – funds in the pension are shielded for retirement.
Employer-funded, tax-deductible contributions: IPP contributions are usually made by the corporation (employer) on behalf of the physician (employee). These contributions (and associated setup or actuarial fees) are tax-deductible expenses for the corporation. This shifts income out of the company into a sheltered plan, reducing corporate taxes.
Terminal funding and top-ups: If investment returns underperform (e.g., below a standard 7.5% assumption), the company can make additional “top-up” contributions to ensure the defined benefit is funded. At retirement, terminal funding may allow extra contributions to enrich benefits (such as indexing for inflation or early retirement bridging benefits) if the plan member chooses to enhance the pension.
Retirement income and rollover: At retirement, an IPP can be converted to pay a lifetime pension. Alternatively, the accumulated assets can be transferred to a Life Income Fund (LIF) or similar vehicle, subject to locking-in rules (which vary by province). On death, any remaining IPP assets can transfer to a surviving spouse’s plan or be paid to the estate (subject to tax), rather than being forfeited – thus the remaining value ultimately goes to the family or estate.
Drawbacks and considerations of IPPs: Despite their advantages, IPPs come with potential downsides:
Complexity and administration costs: IPPs are more complex than RRSPs. They require an initial setup and regular actuarial valuations (usually every three years, or annually if the plan is drawing benefits) to calculate contribution limits. There are administrative fees for setup and ongoing maintenance, though these fees are tax-deductible. The corporation must file pension filings with CRA and possibly provincial authorities. However, many financial institutions and actuarial firms (and recently some fintech providers) offer turn-key IPP administration services for a fee.
Age and income threshold: IPPs are generally most efficient for older, high-income individuals. Financial experts typically recommend IPPs for those over 40 years old with a high consistent T4 salary (often $100,000-$150,000 or more) (GFS Sponsor Access - Individual Pension Plans (IPPs): Supersized Retirement Plan). If a physician is younger (under 40) or pays themselves mostly in dividends (little or no T4 salary), an IPP may not outperform a simpler RRSP. For example, a 35-year-old doctor would have an IPP contribution room roughly equivalent to an RRSP, negating the main benefit of higher limits while still incurring the higher costs.
Mandatory funding and lack of flexibility in contributions: With a defined benefit plan, the corporation is committed to funding the pension benefit. In profitable years this is fine, but if the business has a lean year, the required contribution (to cover current service or top-ups) could strain cash flow. If the plan’s investments perform very well such that the IPP becomes “overfunded” (assets exceed the amount needed for the promised benefit by more than a small surplus margin), the company may be forced to take a contribution holiday (stop contributions) until the surplus falls – during which time no further tax-deductible contributions can be made. This excess surplus rule can limit contributions if the plan is ahead of schedule.
Locking-in of funds: Traditional pension regulations in many provinces require that defined benefit pension assets be “locked-in” for retirement (cannot be withdrawn as a lump sum, except in small amounts or under special circumstances). However, many provinces have exempted one-person pension plans from pension standards legislation in recent years. For example, Ontario, B.C., Alberta, Manitoba, Quebec and others allow an IPP for a connected shareholder (like a doctor owning their MPC) to opt out of provincial pension lock-in rules. In those cases, the IPP funds might be unlocked and transferable to an RRSP/RRIF at retirement. Nonetheless, physicians should confirm the lock-in status in their province, as locked-in funds have limits on withdrawals (to ensure lifetime income).
Need for T4 income: A physician must draw employment income (salary) to create contribution room for an IPP. Doctors who prefer taking dividends from their corporation (to minimize payroll taxes like CPP) will not generate the T4 necessary for an IPP. Thus, adopting an IPP may require a change in compensation strategy – paying oneself a salary high enough to maximize the pension benefits.
Minimal benefit for short time horizon: If retirement is very near or the physician doesn’t plan to continue their practice for long, an IPP’s benefits shrink. IPPs shine with a longer time to accrue benefits (or significant past service). Setting up a plan for just a few years of contributions may not justify the costs, unless a large past-service contribution is made and the physician will draw a pension for life thereafter.
In summary, an IPP is a powerful “supercharged RRSP” for older, high-income incorporated doctors. It provides maximum tax-deferral and retirement savings with the security of a defined benefit, at the cost of added complexity and commitment. Next, we examine the Personal Pension Plan (PPP), which builds on the IPP concept with additional features.
Understanding Personal Pension Plans (PPPs by INTEGRIS)
The Personal Pension Plan (PPP®) is a retirement program offered by INTEGRIS Pension Management that combines elements of an IPP with additional contribution options. It is essentially a combination registered pension plan that includes three components:
a Defined Benefit (DB) component – very similar to a traditional IPP’s pension formula;
a Defined Contribution (DC) component – akin to an individual RRSP or money-purchase pension, with a cap (the money purchase limit);
an Additional Voluntary Contribution (AVC) account – an extra contribution account for any surplus or extra savings.
In structure, the PPP is “effectively an IPP with a DC component” added on. The plan is still registered with CRA as a pension plan (and thus subject to pension rules and limits), but it offers greater flexibility in how contributions can be made. Key features and purported benefits of the PPP include:
Higher contribution room and early maximization: Like an IPP, the PPP allows higher tax-deductible contributions than an RRSP, particularly as one ages. INTEGRIS provides 2025 contribution data showing that a PPP can allow roughly $33,810 to $54,809 per year (depending on age), compared to an IPP’s $22,496 to $54,809 and an RRSP’s ~$32,490 max. For instance, for older physicians, both IPP and PPP permit far above the RRSP limit. Additionally, PPP proponents note that a new PPP member can double up contributions in the initial year – for example, contribute to an RRSP for the first part-year and also do a PPP contribution (DC/AVC) in that year. This effectively means a young professional can start a PPP and not lose out on early RRSP room, giving them a head start on savings. Over a career, starting pension contributions earlier yields a larger nest egg by age 71 than waiting until 40 to start an IPP.
Defined contribution flexibility (cash flow based contributions): A hallmark of the PPP is flexibility to adjust contributions based on business conditions. The plan member can switch between DB and DC contributions year by year. For example, in lean years or recessions, the physician’s corporation can reduce or skip the defined benefit contribution (going on a “contribution holiday” in the DB portion) without losing the ability to contribute altogether – the physician can still contribute to the DC/AVC side (up to 18% of salary) and claim a personal deduction. This means if the corporation can’t fund the pension in a given year, the doctor could make a smaller voluntary contribution themselves (like an RRSP contribution) to keep saving. Conversely, in strong years, the business can contribute the maximum to both DB and DC components. This flexibility aligns with variable cash flows, a feature particularly useful for doctors with fluctuating income (e.g., those running a clinic or lab with variable profits). In essence, the PPP “enables up to 17% of salary to be contributed to an RRSP in the next year” when the DB plan is at its limit, something a standalone IPP cannot do.
Avoiding overfunding issues: The PPP’s structure helps prevent the issue of excess surplus that plagues IPPs. If the DB portion becomes overfunded, the surplus can be shifted to the AVC account or contributions redirected to the DC side. This prevents forced contribution holidays that IPPs would trigger. PPP clients therefore can continuously maximize deductions either via corporate DB contributions or personal AVC contributions, even when the DB is temporarily at capacity.
All IPP features included: Since the PPP’s DB component is essentially an IPP, it also offers past service buybacks, terminal funding at retirement, and the same defined benefit formula as an IPP. INTEGRIS asserts that “everything an IPP offers is already part of the DB component of the PPP”. Thus, PPP members can make large past service contributions when setting up the plan (often resulting in significant first-year deductions), and can do terminal enhancements at retirement (assuming the plan is converted to pure DB at that point to meet CRA rules).
Family members and multiple participants: A PPP can cover the business owner and their spouse or children who work in the corporation. Unlike traditional pension plans which must offer coverage to all eligible employees (and can’t discriminate in favor of family), the PPP’s status and provincial exemptions allow it to include just certain members (often the owner and family on payroll). This is a distinct advantage for a physician who employs a spouse or adult children in the practice – the family can participate in the plan, pooling assets and fees, and potentially transferring wealth within the family. For example, contributions for the spouse/child create their own retirement assets, and if the primary doctor passes away, the remaining pension assets can roll to the surviving family members’ benefits tax-free. INTEGRIS highlights that with a PPP, “when I die my entire pension goes to [my family] with no tax and no probate,” whereas with a public sector pension (like HOOPP) typically only a spousal pension continues and eventually the rest reverts to the plan. This intergenerational retention of retirement assets is attractive for those wanting to keep wealth “in the family”.
Tax-deductible and corporate-funded: Similar to an IPP, contributions to the PPP (both DB and DC components) made by the corporation are tax-deductible to the company, and even the plan’s administration fees are deductible. The ability to do a large past-service contribution buyback when initiating the PPP can lead to a big deduction in the first year – effectively unlocking the tax value of previously accumulated corporate earnings. Over time, three sources of tax deductions are possible: corporate DB contributions, corporate DC contributions, and individual AVC (RRSP-like) contributions, giving what PPP promoters call “three times the amount of tax assistance” compared to an RRSP alone.
Investments and oversight: The PPP enjoys the same wide investment options as any pension (similar to IPP, including alternative assets not allowed in RRSPs). Additionally, INTEGRIS provides fiduciary oversight and can serve as a corporate trustee for the plan. This means a professional team ensures compliance with pension regulations and handles plan administration (as the pension committee), relieving the physician of fiduciary liability. In contrast, a standard IPP often just comes with actuarial support and the plan sponsor (the company/owner) remains the administrator/trustee by default. The PPP’s built-in governance may appeal to doctors who want a more hands-off approach to running a pension plan.
Drawbacks and considerations of PPPs: While PPPs offer a bundle of features, there are considerations to keep in mind:
Fees and provider dependence: The PPP is a proprietary offering (trademarked by INTEGRIS). Enrolling in a PPP generally means engaging INTEGRIS (or an affiliated advisor) to set up and manage the plan, which involves provider fees. These plans can have setup fees and annual fees that may be higher than a do-it-yourself IPP approach, reflecting the additional services (trusteeship, compliance, etc.). While fees are tax-deductible, they eat into net returns. Critics point out that PPP’s added complexity can mean higher costs, and if the extra features (DC/AVC contributions) are not fully utilized, the physician might be paying for bells and whistles they don’t need.
Comparative investment growth considerations: Some financial planners argue that the DC component of a PPP is effectively like an RRSP, but could be less efficient if additional fees are levied. In the Great Debate event (2023), one IPP proponent noted “if an employee receives additional income equal to an RRSP contribution, they are better off than DC contributions of the same amount” – implying that the PPP’s DC part may not outperform a normal RRSP for younger participants, especially after fees. In other words, for a young doctor, simply maxing an RRSP (with low cost index funds, for example) could yield more than contributing the same amount into the PPP’s DC account that has administrative overhead. The PPP’s advantages tend to manifest fully when one leverages the combination of all components over time.
Regulatory scrutiny of novel features: The PPP has some innovative aspects (like the ability to easily switch contribution modes, include family only, or potentially incorporate life insurance within the plan). Conservative advisors have cautioned that certain aggressive uses might draw CRA scrutiny. For instance, CRA has historically frowned upon excessive death benefits or life insurance inside registered pension plans. If a PPP is used to shelter large amounts for very young family members or to hold insurance, there is a risk that tax authorities could challenge those moves. However, the PPP structure itself is CRA-approved; it’s more about cautious plan design to stay within guidelines.
Not fundamentally a higher DB formula: It’s important to note that for the core pension (DB), the maximum benefit levels of a PPP are the same as an IPP. Both are defined by the Income Tax Act’s pension limits (roughly 2% of final earnings per year of service, up to the defined benefit pension maximum). For example, if a 60-year-old doctor in either an IPP or PPP earned well above the YMPE, both plans would allow roughly the same annual contribution to fund the maximum pension. PPP doesn’t magically provide a bigger pension than an IPP’s would – its extra contribution room comes from the DC/AVC side. Therefore, if one’s goal is purely to maximize the defined benefit and they have steady cash flow, a plain IPP can achieve that just as well.
Potential over-contribution if not managed: With more moving parts (DB, DC, AVC, plus RRSP in first year), a PPP user must coordinate carefully. Contributing to a PPP replaces RRSP room going forward; one must avoid double-dipping in the same year, except as specifically allowed with the initial dual contribution strategy. The plan’s pension adjustment (PA) will typically eliminate new RRSP room each year. If the physician mistakenly contributes to both an RRSP and the PPP beyond limits, it could cause tax penalties. Essentially, the PPP offers flexibility, but also requires guidance to use that flexibility without breaching tax rules. INTEGRIS’s ongoing oversight is meant to help prevent such issues.
Limited availability and lock-in rules: Since PPPs are administered by a private company, their adoption depends on awareness and access to INTEGRIS or affiliated advisors. Not every physician will have local advisors familiar with PPPs. By contrast, IPPs are offered by many large financial institutions and actuarial firms. Also, while PPPs in most provinces are exempt from some pension rules (e.g., unlocking), this is due to recent regulatory changes that also apply to IPPs. For instance, Ontario now exempts one-member pension plans from needing to register with the provincial regulator, which eliminates the locking-in and funding requirements for both IPPs and PPPs in that province. So in provinces with exemptions, PPP funds are not locked-in either – they can be taken out at retirement like IPP funds. In provinces without exemptions, a PPP might still face locking-in rules similar to an IPP. It’s important for physicians to confirm how their province treats individual pension plans, whether IPP or PPP, to know liquidity constraints.
In summary, the PPP is a more flexible, hybrid pension plan that can adapt to different financial situations. It is often marketed as an “upgrade” over a traditional IPP, especially for those who want maximum contributions at any age and the ability to include family. However, many of its benefits come into play over a long timeframe or specific scenarios – if a physician simply wants the high contributions of a defined benefit plan and has stable cash flow, an IPP alone can suffice. The distinction between IPP and PPP will become clearer by directly comparing their benefits and drawbacks side-by-side.
IPP vs PPP – Key Benefits and Drawbacks
To differentiate the two plans clearly, let’s summarize the main pros and cons of each:
Key Benefits of an IPP
Higher Tax-Deductible Contributions (Age 40+): After age 40, IPPs allow significantly larger contributions than RRSPs. This accelerates retirement savings for mid-career and late-career physicians.
Past Service & Terminal Funding: IPPs permit one-time past service contributions (for years before plan setup) and additional terminal funding at retirement to enhance the pension (e.g., adding indexing), all fully deductible.
Tax-Deferred Growth: Investments grow tax-free until withdrawal, with broader investment choices than RRSPs (including certain alternative assets).
Creditor Protection: IPP assets are held in trust and generally protected from creditors and lawsuits – important for doctors concerned about liability.
Retirement Income Security: As a defined benefit plan, an IPP provides a predictable lifetime pension in retirement. The company bears the investment risk to deliver the promised benefit, reducing longevity risk for the physician.
Estate Value: If the physician dies, any remaining IPP assets (after providing any spousal pension) belong to the estate or beneficiaries (subject to tax) – unlike a group pension where surplus reverts to the plan.
Potential Drawbacks of an IPP
Complexity and Cost: IPPs require actuarial setup and ongoing administration. There are setup fees and annual or triennial valuation costs. While fees are deductible, the plan needs to be maintained for many years to justify these costs.
Contribution Rigidness: The corporation is normally obligated to contribute the calculated amount each year. Skipping contributions isn’t an option without freezing the plan. If the business hits a rough patch, funding the IPP can be a burden (though in some cases contributions can be reduced if the plan has a surplus).
No Contributions if Overfunded: If investment returns are strong, an IPP can become overfunded (“excess surplus”). CRA rules then force a contribution holiday – no further contributions until the surplus is absorbed. This halts new deductions and could lead to lost retirement saving opportunity unless other plans are used in the interim.
Requires T4 Income & Age Consideration: A physician must pay themselves sufficient salary to maximize an IPP. Those under 40 or with modest salaries won’t see much benefit over an RRSP, meaning an IPP may not be worth the effort until mid-career.
Provincial Pension Rules (if applicable): In provinces where IPPs are not exempt from pension law, funds might be locked-in and subject to maximum withdrawal limits in retirement. Also, if the corporation had other employees, a pension regulator might scrutinize why only the doctor is covered (though one-person plans are typically exempt from needing to include employees). Recent rule changes in many provinces have minimized this issue by treating one-member plans separately.
Key Benefits of a PPP (INTEGRIS Personal Pension Plan)
Blended DB/DC Structure = More Contribution Room: The combination of DB pension plus DC/AVC accounts means PPP owners can contribute more in total than an IPP or RRSP alone in many cases. For example, a high-earning physician in 2025 might contribute over $50,000 via a PPP vs ~$32,000 via RRSP. Even younger professionals can make significant contributions by using the DC/AVC components in addition to the base DB.
Flexibility to Adjust Contributions: The PPP allows toggling between Defined Benefit mode and Defined Contribution mode. In years where the corporation doesn’t want to (or can’t) fund the full DB pension, the plan can switch to DC contributions or personal AVCs. This cash-flow flexibility is a major selling point – you won’t be forced to contribute more than the business can afford, yet you can catch up later. Essentially, the PPP “adapts your contributions to your business’ cash flow” (INTEGRIS Pension Management Corp).
No Lost Deduction Opportunity: Thanks to the AVC and the ability to contribute to an RRSP when the DB is at limit, the PPP helps ensure every year some tax-deferred contribution can be made. You’re never in a situation where your money is “stuck” because the plan is well-funded – you just redirect contributions to a different bucket.
Past Service and Early Start: Like an IPP, a PPP can buy past service to give a large initial deduction. Additionally, PPP can be beneficial from an earlier age. One can even start in their 30s and contribute concurrently to an RRSP in the first year, leveraging both vehicles. Over decades, an early PPP start can yield a much larger retirement fund than waiting until 40 to start an IPP.
Multi-Member & Family Inclusion: PPPs can include multiple members (e.g., spouse, children in the business) without needing to include unrelated employees. This enables family pension planning – shifting some income to family members’ salaries and then into their pension accounts. All members’ assets stay within the family’s plan. On the death of one member, assets remain to provide for beneficiaries or other family members in the plan, achieving intergenerational wealth transfer with no immediate tax.
Strong Governance and Compliance Support: INTEGRIS PPP comes with a corporate trustee and a team of pension lawyers/administrators who act as the plan’s pension committee. This high level of fiduciary oversight means the plan is kept compliant with pension laws, relieving the physician of that responsibility. It provides peace of mind and is particularly useful given the PPP’s complexity.
Creditor and Legal Protection: As a pension plan, the PPP’s assets are similarly protected from creditors. INTEGRIS emphasizes it provides the “highest level of creditor protection in Canada” for those retirement assets (INTEGRIS Pension Management Corp). Also, having INTEGRIS as a corporate trustee helps shield the plan sponsor from legal liability or errors in plan administration.
Regulatory Advantages: PPPs have benefited from regulatory changes that exempt them from provincial pension benefits acts in most provinces, similar to IPPs. This means contributions are not locked-in and can be accessed if truly needed (through the AVC account). The plan is registered federally with CRA, but not subject to burdensome provincial funding rules that used to apply to pensions (Ontario, for example, no longer requires funding valuations or registrations for individual plans).
Potential Drawbacks of a PPP
Greater Complexity & Proprietary Structure: The PPP’s multi-component nature makes it even more complex than an IPP. It essentially wraps an IPP (DB plan) and a personal/company RRSP (DC plan) together. Without expert guidance, this can be confusing. It’s a proprietary program – reliant on INTEGRIS’s platform and fees. If one ever wanted to “unbundle” it, it might involve converting the PPP’s DB to an IPP and spinning off DC assets to an RRSP, which could be an involved process.
Annual Fees: Typically, PPP administration fees might be higher than a standard IPP because of the added services (actuarial, trustee, compliance, reporting). While these are deductible, the physician should ensure the extra tax savings of PPP outweigh these costs over time.
No Huge Advantage at Very High Ages vs IPP: For a physician who is already, say, 60 and has never had a pension, a PPP will allow the same large past service buy-in as an IPP. In such cases, both plans perform similarly. The PPP’s DC component is capped by the same money-purchase limit as any pension or RRSP. So an older doctor who can afford the full DB contributions each year won’t necessarily use the DC part. The comparative benefit of PPP is less about higher DB limits (which are equal) and more about flexibility. If flexibility isn’t needed (because the doctor’s corporation can always contribute the max), an IPP yields the same retirement result.
Criticisms from Some Financial Experts: There is an ongoing debate about PPPs’ purported advantages. Some experts have accused PPP marketing of using unrealistic scenarios or “straw man” comparisons. For example, an Integris chart once showed a 16-year-old contributing until 65 to demonstrate PPP’s edge – a scenario labeled “very unlikely” (since minors or very young professionals would not normally start an IPP/PPP). Additionally, the claim that PPP always beats an “RRSP then IPP” strategy has been challenged. In truth, many of PPP’s benefits can be achieved by combining existing tools: e.g., one could use an RRSP until 40 then start an IPP (common advice), which for many will yield sufficient retirement savings without PPP. Thus, some view PPP as more evolutionary than revolutionary – a convenient package, but not a magic bullet. Each doctor’s situation should be evaluated to see if PPP’s added flexibility will be utilized.
Availability and Portability: Since PPP is offered by a specific company, switching providers or advisors might be less straightforward than with an IPP (which any actuary can take over). If INTEGRIS were to change terms or if service quality varies, the client might feel somewhat tied to that provider due to the integrated nature of the plan. However, it’s worth noting PPP is a registered pension plan – theoretically, it could be transferred or managed by another firm if needed by restructuring it as a regular IPP plus DC plan.
In summary, IPPs are tried-and-true defined benefit pensions ideal for older, high-earning doctors wanting to maximize retirement savings with a predictable benefit. PPPs offer a modern twist – combining defined benefit with defined contribution flexibility, aiming to give the “best of both worlds” (high contributions plus adaptability). The PPP’s benefits shine if one needs flexibility or wants to involve family members; the IPP remains perfectly effective for a solo physician who simply wants the largest possible pension contribution and can commit to it.
The table below provides a side-by-side comparison of key features of IPPs and PPPs for a quick overview.
IPP vs PPP: Side-by-Side Comparison
Feature Individual Pension Plan (IPP) Personal Pension Plan (PPP®) Plan Type Defined Benefit (DB) only. Combination plan: DB + DC + AVC components. Eligibility Incorporated professionals (e.g., doctors) with T4 salary; ideally age 40+. Same as IPP (incorporated with T4 income). Can be started at younger age; PPP marketing targets even <40 professionals. Contribution Limits Actuarial, based on age/salary. Exceeds RRSP limit after ~age 40. For example, at 50 allows ~$18k more than RRSP. Max 2025 range ~$22k to $55k/yr depending on age. DB portion same as IPP (age/salary driven). Plus DC/AVC up to 18% of pay (money purchase limit). Max 2025 range ~$34k to $55k/yr (higher contribution room at younger ages due to DC). Can contribute to RRSP in first year as extra. Past Service Buyback Yes – can make large lump-sum for pre-plan service (creates big initial deduction). Yes – also possible (PPP DB component functions like an IPP). Flexibility of Funding Low flexibility – company must fund required DB contributions; can’t contribute above formula (except at retirement). If plan in surplus, contributions pause. High flexibility – can switch to DC or AVC contributions if taking a break from DB funding. Can adjust contributions to business cash flow (down or up). Not forced to stop all contributions when DB is in surplus (use DC/AVC instead). Investment Options Broad – can invest in diverse assets (pension law allows some assets RRSPs can’t hold). Subject to prudent investment rules and 10% concentration limit. Broad – same as IPP for DB assets. DC/AVC assets also have wide options. PPP specifically highlights access to alternative assets beyond typical RRSP choices. Creditor Protection Strong – assets in trust are generally creditor-proof. Strong – also held in trust. INTEGRIS claims highest level protection (INTEGRIS Pension Management Corp). Both IPP and PPP protect assets from company or personal creditors. Administrative Support Typically involves hiring an actuary/administrator for setup and triennial valuations. The company (doctor) may act as or appoint the plan administrator/trustee. Turn-key administration by INTEGRIS – comes with corporate trustee and a pension law team overseeing compliance. Less hands-on for the doctor, as INTEGRIS acts as pension committee. Regulatory Oversight Registered with CRA. Many provinces exempt one-member IPPs from pension legislation, simplifying compliance (no provincial filing, no locking-in in those provinces). Same federal registration with CRA. Likewise benefits from exemptions in most provinces. PPP is a designated plan just like an IPP in CRA’s eyes. Impact on RRSP Room Each year’s IPP contribution generates a Pension Adjustment (PA) that reduces RRSP room dollar-for-dollar. Effectively replaces further RRSP space while active. Same – PPP contributions (DB or DC) produce a PA, reducing or eliminating RRSP room. However, PPP allows using RRSP in the first year concurrently and if DB in surplus, up to 17% of salary can go to RRSP the next year as AVC. Multi-Participant Usually a single member (the physician). Can potentially add spouse if spouse is an employee of the corporation (would require spousal IPP setup). Traditional pension plans must offer to all eligible employees, but one-member plans avoid that by staying one-member. Multi-member – can include spouse and children employed by the corporation. Does not have to include other (non-family) employees by design. (Note: New full-time non-family employees in a corporation with a pension may raise issues; PPP structure typically targeted to owner-family only.) Estate / Death Benefit If member dies, spouse can receive survivor pension or assets can transfer to spouse’s RRSP. Ultimately remaining assets go to beneficiaries or estate (taxed if no spouse). Nothing reverts to a larger pool – stays with family. Similar principle: Each member’s share stays with their beneficiaries. PPP emphasizes no “deemed disposition” at death – assets can seamlessly continue for family members in plan. Allows intergenerational transfer within the plan structure (especially if family members are co-members). Cost Considerations Setup fee (often a few thousand dollars) plus actuarial valuations (e.g., ~$1,500+ every 3 years) and annual filing fees. Investment management fees separate. Costs are tax-deductible to corporation. Setup and annual fees paid to INTEGRIS (covers actuarial, admin, trustee). Potentially higher ongoing cost than a basic IPP due to added services. Also investment management fees. All fees tax-deductible (corp for DB/DC fees, personal for any AVC fees possibly). Need to utilize plan fully to justify cost. Ideal Candidate Mid- to late-career physician (40s, 50s, 60s) with high stable income (≥ $150k T4) and significant corporate savings, seeking maximum retirement funding and a defined benefit. Comfortable with a fixed annual contribution. Incorporated professional at any career stage who wants maximal flexibility: e.g., a 35-year-old high earner who wants to start aggressive retirement saving now; or a 45-year-old who has variable income year to year; or anyone who wants to include their spouse/kids in a pension. Those who value a one-stop solution with professional oversight. Who Might Avoid It Those under ~40 or with low/moderate incomes (little advantage over RRSP). Also if one plans to retire or wind down corporation in very few years (insufficient time to benefit). Or if one dislikes the paperwork complexity. Those who can already fully commit to a straight DB (and thus don’t need flexibility) – they might opt for simpler IPP. Also, anyone uncomfortable being tied to a single provider’s plan. If the corp has many non-family employees that would need coverage, a group plan or other approach might be better.
Table: Comparison of Individual Pension Plans (IPPs) vs Personal Pension Plan (PPP®) features.
Optimal Timing: When to Start an IPP or PPP
One of the most common questions is “At what age or stage should a physician set up an IPP or PPP?” Both plans work best when a physician has sufficient earnings and years ahead to capitalize on them, but there are some distinctions:
IPP – Best after age 40: Both CRA rules and expert consensus indicate that an IPP becomes most advantageous once the plan member is in their early 40s or older. The defined benefit formula is based on age, so the older you are, the more you can contribute (because fewer years remain to fund the targeted benefit). Around age 40 is the tipping point where the allowable IPP contribution exceeds the RRSP limit. In practical terms, at age 40, an IPP might allow roughly $2,000-$3,000 more than an RRSP; by age 50, it could be over $18,000 more per year; and by age 65, the annual contribution room can be several times an RRSP limit (GFS Sponsor Access - Individual Pension Plans (IPPs): Supersized Retirement Plan). Therefore, a common strategy is for incorporated professionals to use RRSPs in their 20s and 30s, then switch to an IPP in their 40s when the IPP’s superior room kicks in. In fact, a CIBC guide notes that IPP contributions begin to exceed RRSP limits once the individual is approximately 40 years old. Keep in mind that to maximize an IPP, one should have consistent T4 income each year – so the planning for an IPP might start at 40, but you would ideally have been paying yourself a salary all along (generating past service room and demonstrating income to base the pension on).
PPP – Can start earlier if needed: The PPP does not fundamentally change the DB math (so the DB part is still not very beneficial until 40+). However, because the PPP allows additional DC contributions, a very high-earning young physician could use it to contribute beyond their RRSP even before 40. For example, in the first year of a PPP, you could contribute to an RRSP (using last year’s income) and also make a DC/AVC contribution for the current year, effectively doubling up. Integris often illustrates a scenario of someone starting a PPP at age 30 or even 18 and contributing consistently – their claim is that the PPP at all ages beats the strategy of RRSP-until-40-then-IPP, due to the extra early contributions and compounding over decades. While starting a pension plan in one’s 20s is unusual (since few have corporations and steady salary that early), a motivated mid-30s doctor with high income could consider a PPP to begin maximizing tax-sheltered contributions sooner than an IPP would allow.
Career stage and earnings stability: For mid-career physicians (40s and 50s) who are late in starting retirement savings, an IPP or PPP can be a boon. At those ages, the annual contribution limits are high, and there may be significant past service since incorporation to buy back, resulting in a large immediate boost to retirement funds. This is often when doctors seriously consider these plans – they’ve built their practice, have stable cash flow, and realize their RRSP alone won’t allow them to catch up to the retirement fund they desire. For a doctor in their 50s, not only can they contribute perhaps $30k-$40k+ per year going forward, but if they incorporated say 10 years ago and have paid themselves $150k salary each year, they might make an initial contribution of several hundred thousand dollars to the IPP/PPP for those past years (GFS Sponsor Access - Individual Pension Plans (IPPs): Supersized Retirement Plan). This huge deduction saves corporate tax and instantly moves a big chunk of retained earnings into a tax-sheltered environment for growth as retirement nears.
Late-career (60s): Those in their 60s can still set up a plan (as long as they have earned income and are not past the age where a pension must start, which is 71). In fact, the older you are, the more an IPP can allow in contributions in a short span. However, starting very late (mid-60s) gives little time for compounding and little time to amortize setup costs. It could still make sense if, for example, a 64-year-old physician plans to work till 71 – they could get 7 years of contributions plus a big past service contribution and then immediately start drawing the pension at 71. Each case should be evaluated with an actuary’s illustration. Notably, you cannot contribute to an IPP (or RRSP) after the end of the year you turn 71, as pension payments must commence by then or the funds transferred out.
When not to start yet: If a physician is in their 30s and just starting a practice, they might hold off on an IPP/PPP unless their income is exceptionally high. At younger ages, the cost-to-benefit ratio may be low – you incur setup fees and admin for relatively modest extra room. Additionally, younger doctors might have other priorities (e.g., paying off debt, buying a home) such that locking away large sums in a pension isn’t ideal. In those early years, RRSPs and TFSAs (with full flexibility and low cost) might suffice. Once the practice matures and disposable corporate profits are available beyond immediate needs, that is a signal one can look into these pension plans.
In short, the optimal age to establish an IPP is typically 40+, whereas a PPP could be justified earlier for those wanting to push every tax-deferral avenue (though many still effectively begin around 40 as well). Both IPP and PPP become more compelling as one’s income, corporate savings, and age increase. A mid-career incorporated doctor who hasn’t yet leveraged these plans should evaluate the potential benefit – often the math shows that the tax savings and greater contribution room will outweigh costs, especially if they have a decade or more of practice left.
The IPP vs PPP Debate: Which One is Better?
There has been an ongoing debate in financial circles about whether the newer Personal Pension Plan truly outshines the traditional Individual Pension Plan. Proponents of the PPP argue that it is a more advanced and flexible tool, whereas supporters of the IPP sometimes suggest that the PPP’s benefits are overstated marketing, and that an IPP (possibly supplemented with an RRSP) is sufficient for most. Here we examine the key points on each side, based on recent discussions:
Regulatory and Tax Differences: On paper, there is no difference in how CRA treats the DB portion of a PPP vs an IPP – “both are designated pension plans” under the Income Tax Act with the same limits. A PPP’s defined benefit component is bound by the same pension adjustment and maximum accrual rules as an IPP. So, an incorporated doctor age 50 with a $150,000 salary would have the same basic DB contribution room whether in an IPP or a PPP. PPP’s extra contributions come from its DC/AVC options. IPP supporters point this out to dispel any notion that PPP’s defined benefit is bigger – it isn’t. Any claim that a PPP yields a much higher retirement benefit than an IPP must be due to assuming the PPP owner contributed extra via DC/AVC. In fact, an IPP sponsor could also contribute to an RRSP or DC plan for the same individual outside the IPP. IPPs aren’t mutually exclusive with RRSPs – often IPP owners do have TFSAs and maybe some RRSP room from earlier years. Some IPP advocates argue that “IPP sponsors commonly have additional DC/RRSP, so it’s false to say only PPP has this feature”. Essentially, a wealthy physician can mimic a PPP by using an IPP for DB and still investing any extra cash in other vehicles (albeit with some limitations if the IPP generates a large PA, they might use non-registered corporate investments for the rest).
Cost and Complexity vs Benefit: PPP defenders highlight the convenience of having an integrated plan (one plan, one provider, multiple ways to contribute). Detractors might counter that this integration adds cost without adding real new retirement income for many. For a physician who doesn’t need the flexibility (i.e., they can afford to max a pension plan every year), an IPP’s simplicity could be preferable. Jason Pereira, a financial planner, critiqued PPP claims as potentially “straw man” arguments. He gave an example of Integris showing a comparison over a career starting at age 16, which is not realistic. He also noted that if you compare an RRSP vs the DC inside a PPP, “the PPP is worse off due to fees applied to [the] DC component”. The implication is: if a young professional is contributing at the RRSP limit, doing so in an RRSP might yield better net returns (due to lower cost) than doing it inside a PPP’s DC account (which carries additional admin fees). So the advantage of PPP for young contributors could be negated by fees. Integris might rebut that their fees are reasonable and that the DC inside PPP still shelters corporate money (since it’s the corporation contributing to the DC for the employee, which an RRSP would be the individual contributing personal after-tax dollars – a subtle difference if the corporation has surplus cash).
Flexibility and Use Cases: Many advisors acknowledge PPP’s flexibility is beneficial in certain scenarios – for example, if a doctor’s corporation has an unusually bad year, an IPP’s required contribution could be a problem, whereas a PPP could switch to DC mode and not strain the company. If the doctor anticipates variable income (maybe they’re an entrepreneur with ventures outside medicine, or working part-time), PPP offers a kind of safety valve. Also, including family members is easier in a PPP, which can be a significant benefit if, say, both spouses are incorporated professionals – they could jointly save in one plan. IPP vs PPP might also depend on personal preference for control. IPP gives a bit more direct control: you hire the actuary, you’re the plan administrator, you decide if/when to wind it up. PPP outsources much of that to Integris – convenient for some, but others might prefer not to cede that control or be tied into a specific company’s ecosystem.
Is either superior? The consensus among many financial experts is that neither plan is inherently “better” in all cases; it depends on circumstances. The PPP is not a fundamentally different product, but a packaged enhancement. For a physician who will fully utilize the extra features, it can certainly lead to more money in their pocket at retirement. For instance, if one can contribute to a PPP from age 35 onward, they will likely accumulate more than someone who waited to do an IPP at 45 (simply because of 10 more years of high contributions). But one could similarly have contributed to an RRSP in those early years, so the real question is whether the PPP structure allowed more tax savings than an alternative strategy. Data-driven assessments generally show that for those over 40 with high income, both IPP and PPP allow tens of thousands more per year in contributions than RRSPs, leading to potentially hundreds of thousands more in retirement assets over decades. Integris, for example, modeled that at a 7.5% return, a PPP could result in nearly $488,000 more over 20 years compared to an RRSP (for someone maximizing both). But an IPP would yield very similar results as the PPP in that comparison, because the bulk of the PPP’s advantage was being compared to just an RRSP.
In summary, the ongoing debate often comes down to marketing vs reality: PPP marketers highlight every possible advantage, while IPP proponents note that some advantages are situational or can be achieved by other means. There is no one-size-fits-all answer. If forced to choose, one might say:
The PPP is superior for physicians who: want maximum flexibility, intend to start their pension plan early in their career, have family on the payroll to include, or who highly value the bundled professional administration (and are willing to pay for it). It’s also a way to consolidate retirement tools (DB pension + RRSP-like account) in one plan.
The IPP is superior (or sufficient) for physicians who: are already in mid-to-late career, primarily need the extra room for defined benefits after 40, have no interest in contributing beyond the DB max, and want to keep administration straightforward (perhaps managed by their existing financial institution or actuary). IPPs might also be preferred by those who are skeptical of new products – IPPs have been around for decades and are well-understood.
Many advisors would agree that both IPPs and PPPs can be appropriate in different circumstances. The key is to analyze the physician’s financial situation: cash flow volatility, retirement goals, family involvement, and willingness to engage in a sophisticated planning tool. A careful, data-backed projection by a qualified actuary or planner can illustrate whether the PPP’s extras would translate into significantly greater retirement wealth or not, for that specific doctor. In either case, both options generally outperform not using a pension plan at all for an established physician with high income – because both allow far greater tax-deferred saving than the status quo of just RRSPs.
The next section provides two brief case studies: one scenario where using an IPP or PPP is highly advantageous, and one where it might not be the right fit.
Case Study 1: When a Pension Plan is Highly Appropriate
Dr. Alice – A Late-Career Specialist Boosting Retirement Savings
Dr. Alice is a 55-year-old ophthalmologist in British Columbia who has been running her practice through a medical professional corporation for 20 years. She draws a salary of $180,000 from her corporation (and dividends on top) and has consistently maxed her RRSP. However, most of her substantial earnings have been left in the corporation over the years (retained earnings now total around $1 million, invested in a corporate investment account). With retirement on the horizon in 10-15 years, she’s concerned that her RRSP and other savings might not be enough to maintain her lifestyle.
After consulting a financial planner, Dr. Alice decides to set up an IPP. Here’s why this made sense for her:
At 55, her allowable IPP contributions far exceed RRSP room. In the first year, the actuarial calculation for her IPP (given her age and salary) is around $26,000 for current service, compared to an RRSP limit of about $18,000. Additionally, because she has 20 years of past service (since incorporation) with a high salary, she is eligible to make a one-time past service contribution. The actuary calculates this past service liability at roughly $300,000 (this figure takes into account her salary history and that she didn’t have a pension in those years). Her corporation can contribution that $300k into the IPP, transferring a large chunk of her corporate investments into the sheltered pension in one fell swoop (GFS Sponsor Access - Individual Pension Plans (IPPs): Supersized Retirement Plan). This creates a huge deduction in the corporation, reducing corporate taxes for the year. It also moves what was taxable investment income (subject to passive investment tax rules) into a tax-deferred environment (the IPP).
With the IPP, Dr. Alice can also plan to do “terminal funding” at retirement. She likes the idea of potentially adding an inflation indexation to her pension and a generous survivor benefit for her spouse. By planning these enhancements, she knows at age 65 she can make additional contributions if needed to fund those features. This could be another sizable deductible contribution upon retirement.
Dr. Alice’s corporation has very stable cash flows (largely MSP payments and surgery fees) and no other employees. Funding an IPP contribution annually (about $30k/year going forward) is very feasible for her budget – in fact, it helps remove surplus cash that would otherwise just sit and generate taxable investment income.
She considered the PPP for its flexibility, but realized she likely wouldn’t need to toggle contributions off – she plans to work steadily until retirement. Also, since her spouse has his own job (not in her corporation) and her children are grown and independent, she has no family members to include in a plan. The added features of PPP might go unused in her case. An IPP meets her needs perfectly by maximizing contributions in a straightforward way.
By implementing the IPP at 55, Dr. Alice was able to contribute ~$326,000 in the first year (past service + current year), all tax-deductible. Over the next 10 years, she will contribute around $30k each year (indexed up). By age 65, her IPP is projected to hold around $1.2 million, enough to pay her an annual pension of approximately $80,000 for life. Combined with her RRSP and other investments, this will comfortably fund her retirement. Had she not used the IPP, her corporate investments would have remained exposed to tax and she’d have far less saved. This case clearly shows that for an older physician with high income and substantial corporate savings, an IPP is an ideal tool to catch up on retirement saving in a tax-efficient manner.
(Note: Dr. Alice’s case could also work with a PPP – she could have done the same past service buyback via a PPP’s DB component. The reason IPP was chosen is simply that the extra PPP flexibility wasn’t needed, and her advisor was more familiar with IPPs. In either case, using a pension plan gave her a huge advantage.)
Case Study 2: When a Pension Plan May Not Be Ideal
Dr. Brian – A Young Incorporated Physician with Variable Income
Dr. Brian is a 37-year-old family physician in Ontario who incorporated his practice two years ago. He currently earns about $120,000 in gross billings. However, to keep things simple, he has been paying himself mostly in dividends from his corporation rather than salary – only about $40,000 of his draw is salary (T4) and the rest as dividends. He also has a busy young family and is unsure if he will remain in private practice or shift to hospital administration in the future. He’s heard about IPPs/PPPs and wonders if he should set one up to start building his pension.
After analysis, it appears neither an IPP nor PPP is ideal for Dr. Brian at this stage:
At 37, Dr. Brian is below the typical age threshold where IPPs clearly outperform RRSPs. If he set up an IPP based on his $40k salary, the allowable contribution would be very small – perhaps on the order of $7,000 (actually lower than what his RRSP room would be on that salary, since 18% of $40k is $7,200 and IPP funding might even be a bit less due to the young age).
To utilize an IPP fully, he’d have to increase his T4 income significantly – likely to at least $100k. But paying himself that much salary would mean higher CPP contributions and possibly higher personal tax than his current dividend strategy. Given his relatively modest total remuneration need (he leaves some money in the corp), he prefers the tax efficiency of dividends. By not taking a big salary, he’s essentially forgoing pension room, but he’s comfortable using dividends and investing inside his corporation for now.
The corporation also doesn’t have a lot of excess cash yet – any profit is either distributed to him or reinvested in the business (he’s upgrading his clinic). There isn’t a strong financial case to lock away tens of thousands in a pension this early, even if he could.
A Personal Pension Plan (PPP) does offer flexibility, and Dr. Brian could theoretically set one up and toggle contributions. However, the fixed costs of a PPP/IPP (perhaps $2,000-$3,000 a year in fees) would eat up a large chunk of the small contributions he’d be making in his 30s. In other words, the plan might not be cost-effective until his income rises. If he started a PPP now and contributed, say, $20k a year, and paid a $2k fee, that’s a 10% cost annually, which likely isn’t worth it.
Dr. Brian also anticipates that in a few years, he might take an administrative role at a hospital which could make him eligible for the hospital’s pension (HOOPP) or at least change his income pattern. Committing to an IPP/PPP now could be premature – especially if he might join HOOPP (a strong defined benefit plan) in 2025 (more on this below).
Furthermore, he has two medical office assistants as employees in his corporation. If he were to set up a pension plan for himself, he’d have to consider the optics and HR implications. While one-member plans don’t legally have to cover other employees, instituting a plan solely for himself might breed discontent. If he wanted to offer staff a pension, that becomes a group plan scenario – far more complex and costly than an IPP/PPP intended for one person.
Given all this, the advice Dr. Brian received was to hold off on an IPP/PPP. Instead, he should continue using his RRSP and TFSA for retirement savings in the short term. These give him full flexibility (he can withdraw if needed for, say, a home purchase or emergency) and minimal fees. As his practice grows and if he begins taking a higher salary in his 40s, he can revisit the IPP/PPP decision. Perhaps in 5 years, if he’s routinely paying himself $150k salary and has more stable profits, an IPP or PPP would then be set up. In fact, any RRSP he’s accumulated can at that point potentially be transferred into the IPP as part of past service buyback, so he isn’t “losing out” by using RRSPs now – it will integrate later.
This case illustrates that if a doctor is too young, not earning enough T4 income, or not ready to commit funds long-term, a pension plan might not be appropriate. The overhead and rigidity could outweigh the benefits. It’s perfectly fine for Dr. Brian to wait until the timing is right – the pension strategy will be far more powerful when he’s older and richer. For now, simpler alternatives serve him better.
These case studies highlight the importance of personalization: Dr. Alice’s scenario reaped huge rewards from an IPP, whereas Dr. Brian’s situation made such a plan impractical. Finally, we turn to a new development in 2025 affecting Ontario physicians – the option to join the HOOPP – and how that compares or complements these private pension plans.
2025 Update: Ontario Doctors and HOOPP (Healthcare of Ontario Pension Plan)
Effective January 2025, incorporated physicians in Ontario became eligible to join the Healthcare of Ontario Pension Plan (HOOPP) – a development that has significant implications for retirement planning. HOOPP is a large, multi-employer defined benefit pension plan traditionally covering nurses, hospital staff, and other healthcare workers. Now, doctors who are incorporated (i.e., have a Medicine Professional Corporation) and draw a salary from their corporation can opt into HOOPP by having their corporation join as a participating employer.
Key features of HOOPP for physicians:
HOOPP is a defined benefit plan with a formula based on the member’s earnings and years of service. The core formula provides an annual lifetime pension equal to 1.5% of average earnings up to the YMPE (Year’s Maximum Pensionable Earnings, which is around $66,600 in 2025) plus 2.0% of average earnings above the YMPE, per year of service. “Average earnings” are calculated over the best 5 years. This formula is similar to other public sector plans and means that if a doctor contributes for many years, they can replace a significant portion of their pre-retirement income with a guaranteed pension. For example, if Dr. Brian eventually joins HOOPP and works 25 years with a final average salary of $150,000, his pension could be roughly: 25 * [1.5% of 66k + 2.0% of (150k-66k)] ≈ 25 * [$999 + $1,680] = ~$67,000 annually for life, indexed to inflation.
Contributions: Both the physician (employee) and the corporation (employer) contribute to HOOPP. As of 2025, the contribution rates are 6.9% of salary up to the YMPE, and 9.2% of salary above the YMPE (for the employee) (New pension plan for Ontario incorporated physicians - BMO Private Wealth). The employer contributes 1.26 times whatever the employee contributes (New pension plan for Ontario incorporated physicians - BMO Private Wealth). In total, roughly 18.3% of employment earnings goes into the pension each year (combined). For instance, at a $150,000 salary, the doctor would contribute about $12,160 and the corporation $15,322, totaling ~$27,482 per year into HOOPP. These contributions are tax-deductible: the doctor’s portion is a personal deduction (like an RRSP contribution, reducing taxable income), and the corporation’s portion is a business expense deduction.
Retirement options: Doctors can choose to start their HOOPP pension as early as age 55 (with reductions if before the normal retirement age) or delay up to age 71. HOOPP includes valuable features like inflation protection (cost-of-living adjustments on the pension), survivor benefits for spouses, and even disability benefits if one becomes unable to work – features that self-managed plans (IPP/PPP) don’t inherently provide unless one uses additional funding to replicate them.
Portability and continuity: If a physician joins HOOPP and later changes jobs (e.g., moves to a different hospital or even leaves clinical practice to work for a HOOPP-participating employer), they can continue in HOOPP, which is a multi-employer plan. The pension is transferable among over 600 healthcare organizations in Ontario. This could appeal to younger doctors who expect career mobility; their HOOPP benefits move with them.
Why an incorporated or hospital-employed doctor might want to join HOOPP:
Secure, Lifetime Income: HOOPP offers secure, predictable retirement income for life, with the backing of a $112+ billion fund. There is a peace of mind in having a guaranteed pension, managed by professionals, that isn’t subject to individual investment mistakes or market downturns in the same way – the plan pools risk across hundreds of thousands of members. This reduces longevity risk (outliving your money) and investment risk for that portion of one’s retirement plan.
Inflation & Survivor Protection: HOOPP’s built-in COLA (Cost of Living Adjustments) means the pension is likely to maintain purchasing power. A private IPP could add inflation indexing, but it would require extra contributions (terminal funding) to fund that. Survivor benefits in HOOPP mean a spouse will continue to get a portion of the pension if the doctor dies first, ensuring family support.
No Hassle & Low Cost (for the benefit provided): Unlike setting up one’s own IPP/PPP, joining HOOPP doesn’t require the doctor to manage anything beyond making contributions. Administration is handled by HOOPP, and the fees are effectively shared across the huge member base (HOOPP’s investment management is highly efficient, with economies of scale). The contribution rates are fixed and might even be lower than what an older doctor would need to contribute to get a similar benefit in an IPP. (HOOPP’s total ~18% of salary contribution is actually comparable to an IPP funding cost for a middle-aged person; an older person might require more like 20-25% of salary to fund a 2% DB, so HOOPP could be seen as a subsidy in that sense – although one could argue HOOPP benefits are capped by formula).
Attractive for those without existing retirement assets: The BMO analysis suggests HOOPP is particularly attractive to younger or mid-career physicians who haven’t accumulated much retirement savings yet, or who rely on salary for living expenses. For someone like a new-in-practice doctor in their 30s or 40s, HOOPP forces a disciplined saving regimen (the 18% contributions) which will build a solid pension. It’s essentially “enforced savings” but with a defined benefit outcome.
Tax advantages: The contributions to HOOPP are tax-deductible (both portions), and later the pension income qualifies for pension income splitting for those over 65 (or any age if the spouse also has a pension). This can reduce taxes in retirement for married physicians. Also, by putting money into HOOPP instead of leaving it in the corporation, the doctor avoids accruing passive investment income in the corporation which can trigger the small business deduction clawback (for corp investment income > $50k). In other words, HOOPP contributions remove money from the corporation in a tax-efficient manner, similar to paying a bonus to fund an IPP, thereby avoiding potential corporate tax integration issues.
Staff recruitment and retention: If the doctor has other employees (e.g., nurses, assistants), having HOOPP can be a perk. Any non-family employees of the corporation must be offered HOOPP if full-time once the corporation joins. While this means additional cost, it also could help attract and retain staff, since HOOPP is a gold-standard pension. The BMO report noted it could support recruitment and retention for staff of the practice. For a busy clinic struggling to keep employees, offering HOOPP might be a game-changer.
No upper limit on salary pensionable (aside from plan rules): In some cases, HOOPP might allow a high-income doctor to earn a sizeable DB pension by contributing on a high salary. However, note that pensionable earnings might be effectively limited by the defined benefit limits in the tax act (for 2025, the maximum pension benefit per year of service is about $3,420). HOOPP’s formula hits that maximum at a certain salary (somewhere around $170k-$180k average salary would yield ~ $3,400/year service). If a doctor makes $300k and contributes on all of it, they are over-contributing relative to the benefit they can ultimately get, and the plan may cap the benefit (excess contributions could go to a separate account or provide ancillary benefits). This is a technical point, but for most, HOOPP’s formula is generous up to typical incomes.
Why a doctor might NOT want to join HOOPP (or at least think twice):
Loss of Flexibility & Control: Once you join HOOPP, you have to contribute based on your salary. You must pay yourself a salary (T4) consistently, which removes the option of dividend-only remuneration. For incorporated physicians who valued the flexibility to declare dividends or adjust their income, this is a shift. Additionally, the money contributed to HOOPP is effectively locked in the plan; you cannot access it until retirement (except perhaps a small commutation if you leave the plan, but that’s highly regulated). For those who liked having access to their corporate savings for, say, a business investment or an emergency, HOOPP funds are off-limits. IPPs/PPPs also lock funds for retirement (especially if locked-in rules apply), but at least with an IPP/PPP you could theoretically wind up the plan and take the assets (subject to tax) if you really needed to – HOOPP does not allow an individual to wind it up; it’s a collective plan.
Mandatory contributions & employee coverage: By joining HOOPP, the doctor commits to contributing a hefty percentage of salary every year. It’s not optional – if you have a bad financial year, you still must contribute based on whatever salary you take or you’d have to reduce your salary (which could impact personal finances). Moreover, once the corporation is a HOOPP employer, all new full-time employees must join HOOPP. This could significantly increase employment costs. For example, if Dr. Brian hires a nurse full-time at $60k, the nurse and the corp must contribute to HOOPP (~$11k/year in total for that employee). The doctor might not have otherwise provided a pension, so that’s an additional expense. Also, there’s a fee to join the Ontario Hospital Association (OHA) as an employer which might be required to participate in HOOPP. These additional costs could make HOOPP less appealing, especially for smaller practices.
Capped Benefits & Lack of Estate Residual: With HOOPP, if a doctor and their spouse pass away relatively early in retirement, the contributions they made essentially subsidize the pool – their children or estate do not receive a large inheritance from HOOPP. In contrast, with an IPP or PPP, any remaining account balance is part of the estate (taxed, but passed on). BMO’s report explicitly notes that with alternatives like an IPP or keeping funds in the corporation, the full value of the assets is available to the family upon death, whereas HOOPP only provides the survivor pension then stops. For someone in ill health or with a family history of shorter longevity, locking into a pension might not be wise – they might prefer to keep control of assets. One could view HOOPP as somewhat of a mortality risk-sharing pool: great if you live long (since it will pay as long as you live), not so great if you have a short lifespan (since you won’t get back everything you put in, in that case).
Lower Contribution Room vs IPP for older/higher earners: HOOPP’s fixed contribution rate (~18% of pay) might actually be lower than what an IPP would allow for an older physician. For example, a 55-year-old making $200k could perhaps contribute $50k+ to an IPP, but HOOPP would only take ~$36k (18%). If the goal is maximum tax-deferral, an IPP/PPP could still outpace HOOPP in terms of yearly contributions for a late-career doctor. HOOPP is designed as a balanced plan for a broad workforce, not specifically to help high earners shelter the maximum. So an incorporated doctor with very high income who wants to sock away as much as possible each year might stick to an IPP/PPP approach.
Already have other plans: If a physician already set up an IPP or PPP, joining HOOPP could complicate things. Technically one can have multiple pension plans, but your RRSP room is impacted by all. A doctor would need to coordinate with an actuary to see if they could continue their IPP accrual while also contributing to HOOPP – generally not, because if they join HOOPP as an employee, they’d likely freeze their IPP (no double dipping on DB pension accruals beyond limits). Some doctors might decide to transfer their IPP into HOOPP (if HOOPP allows a transfer of assets for past service buyback, which it can in some cases). But giving up control of their own plan to merge into HOOPP’s could be a big decision.
In summary, the option to join HOOPP is a welcome opportunity for many Ontario doctors, particularly those who desire a secure pension without managing it themselves. It may be especially appealing to younger or mid-career physicians who hadn’t built up a pension – they can now basically join one of the best pension plans in Canada and gain that safety net. On the other hand, some established physicians might decline HOOPP in favor of their existing retirement strategy. For example, a 50-year-old who already has an IPP and significant investments might feel HOOPP’s benefits don’t justify the loss of flexibility and the need to cover staff.
For hospital-employed physicians (a minority, since most doctors are independent contractors), HOOPP membership is a no-brainer if offered – it’s essentially an employer benefit. For incorporated physicians, it’s an optional strategy to compare against private options. A careful analysis is advised: one should compare projected HOOPP pension vs. what the same money could yield if kept in the corporation or used in an IPP/PPP. The BMO report emphasizes comparing expected returns on corporate investments to the pension benefit. If one expects to invest very well privately, they might forgo HOOPP; if one values the guarantee and has less appetite for managing investments, HOOPP is excellent.
Practical Guidance for Physicians in 2025
For a mid-career or late-career Canadian physician, the landscape of retirement planning tools is richer than ever: IPPs, PPPs, and even entry into large pension plans like HOOPP are on the table. Here’s how to approach the decision in a practical way:
Assess your current situation: How old are you, and how much have you saved? If you are over 40 with little saved, a pension plan (IPP/PPP/HOOPP) could be the turbocharge your retirement needs. If you’re under 40 or just starting out, focus on building your practice first – use RRSPs/TFSAs, and revisit pensions in a few years. Also, consider your income pattern – do you reliably have surplus corporate income to contribute, or is it sporadic? Stable surplus favors IPP (or HOOPP if in Ontario); sporadic might favor PPP for flexibility (or simply keeping the money in the corp until used).
Consider your willingness to commit funds: IPPs/PPPs work best when you’re truly setting aside money for retirement, not to be touched for decades. HOOPP is even more of a locked commitment. If you foresee needing access to your savings (for example, to buy property, fund children’s education, or other ventures), you might lean towards keeping money in the corporation or more liquid accounts. Once money goes into an IPP/PPP/HOOPP, it’s essentially off-limits for other uses.
Factor in family and employees: Are your spouse or children involved in your practice? If yes, a PPP could be a way to provide them retirement savings too (and potentially shift some income to them in a tax-effective manner). If you have non-family employees, think about whether you’d want to offer them a benefit. HOOPP could help attract staff but comes with costs. An IPP is solitary – other staff get nothing from it, which is fine if you compensate them in other ways or they have their own RRSPs.
Analyze the numbers (with an expert): It’s highly recommended to get an actuarial illustration or financial projection. A professional can project your retirement accumulations under different scenarios: e.g., Keep doing what you’re doing (dividends and corporate investing) vs. IPP vs. PPP vs. HOOPP. Look at outcomes at retirement: How much annual income or assets in each case, and what are the tax implications? Ensure the analysis uses up-to-date 2025 limits and tax rates. Often, such an analysis will make the best path clear. For instance, if it shows that by age 65 your corporate investments (taxable) would be, say, $2M vs. IPP would be $2.5M, that $500k difference is huge and argues for the IPP.
Mind the costs but don’t fear complexity unduly: Yes, these plans add complexity and fees, but if the ROI (return on investment in terms of tax saved and growth) is high, they are worth it. The fees are typically a small fraction of the contributions (and again, tax-deductible). As a doctor, you can outsource most of the work to specialists – you don’t have to self-administer the plan. So, while it’s important to understand what you’re getting into, the administrative burden on you is more about initial paperwork and decision-making than ongoing tasks (especially with a PPP or a good IPP provider handling filings).
Stay informed on new opportunities: The financial world changes. HOOPP opening to physicians is one such change in 2025. There may be other province-specific programs or incentives in the future (for example, maybe other provinces will create similar offerings or enhancements to pension options for professionals). Keep in touch with your professional association (OMA, etc.) and financial advisors to know what’s new. Sometimes, joining a large plan like HOOPP could work in tandem with other strategies – e.g., one might join HOOPP for a baseline pension and still set up a Supplementary Retirement Plan or an RCA (Retirement Compensation Arrangement) for additional savings beyond HOOPP limits, if needed.
Conclusion: For incorporated physicians in Canada, Individual Pension Plans and Personal Pension Plans are powerful retirement tools that can provide significant advantages over standard RRSP saving, thanks to higher contribution limits and tax efficiencies. An IPP offers maximum contributions and a defined benefit focus – ideal for those with steady income and approaching retirement. A PPP offers versatility – appealing to those who want contributions to mirror their business reality and possibly include family members in the plan. Neither is inherently “better” universally; it hinges on the physician’s situation.
With the new option of joining HOOPP in Ontario, doctors have a fresh alternative – essentially piggybacking on a public-sector style pension. HOOPP can be great for security and simplicity, but it comes with trade-offs in flexibility and estate value.
Ultimately, a mid- or late-career physician should weigh the cost-benefit over time of each option, using data and professional advice. The decision might even be a combination (e.g., use HOOPP for some security, and keep a corporation for additional investments on the side, or start with IPP and later also join HOOPP for final years). What’s clear is that doing nothing – not leveraging these available plans – could mean leaving money on the table or falling short of the retirement lifestyle you worked hard for. With the information and comparisons provided here, doctors can approach their retirement planning with greater clarity and confidence, armed with knowledge of IPPs, PPPs, and beyond.
Sources:
RBC Wealth Management – Individual Pension Plan (IPP) Highlights
Million Dollar Journey – RRSP vs IPP differences by age
Westcoast Actuaries – Great Debate: PPP vs IPP (2023)
Blue Alpha Wealth – PPP vs IPP Comprehensive Comparison
Canadian Healthcare Network – “Mind-boggling” personal pension (PPP) facts
INTEGRIS Pension Management – PPP Contribution limits (2025) and features
BMO Private Wealth (Feb 2025) – HOOPP for Incorporated Physicians: Benefits & Considerations
HOOPP Announcement – HOOPP opening to incorporated physicians (HOOPP fund status)
CIBC / RBC Insurance – IPP vs RRSP contribution table (GFS Sponsor Access - Individual Pension Plans (IPPs): Supersized Retirement Plan) (GFS Sponsor Access - Individual Pension Plans (IPPs): Supersized Retirement Plan)