Debunking the Myths: Why IPP Complexity, Flexibility, and Cost Are Greatly Overstated

The Individual Pension Plan (IPP) remains one of the most misunderstood financial tools available to business owners and incorporated professionals. Despite its proven value, many hesitate to explore it because of misconceptions about complexity, flexibility, and cost. In reality, each concern is far less significant than it appears.

1. "IPPs Are Too Complex"

It is often said that IPPs are complicated because they involve actuarial filings, pension rules, and annual reporting. In practice, the actual complexity for both accountants and clients is very low.

The actuary and financial advisor manage everything, including plan setup, ongoing administration, and compliance. The client simply receives a year-end tax slip, similar to an RRSP. Accountants find the process straightforward as all reporting is handled professionally, and corporate deductions are clearly documented.

When implemented through the right advisory team, managing an IPP is as simple as managing any other registered plan.

2. "IPPs Lack Flexibility"

Another common misconception is that IPPs lock corporations into mandatory annual contributions. This is not the case, especially in Alberta.

Funding is not required every year. Contributions can be reduced or paused during lower cashflow periods without penalty. Once business conditions improve, the corporation can catch up on missed contributions to remain on track with the retirement goal.

This flexibility can actually be used strategically. Business owners can choose to fund their IPP more aggressively in high-income years to optimize corporate deductions and reduce taxable income, while scaling back during slower periods. This allows the IPP to function as both a retirement tool and a long-term tax management strategy.

3. "IPPs Are Too Expensive"

It is true that IPPs involve higher setup and actuarial costs than an RRSP, but these costs are fully deductible to the corporation. The additional tax-deductible contribution room that IPPs offer often offsets those costs within the first few years.

Beyond that, features such as past service contributions and terminal funding can create tens of thousands of dollars in additional deductions. When viewed properly, IPPs are not an expense but a tax-efficient reinvestment in the owner's future.

The Bottom Line

Concerns about complexity, flexibility, and cost are often exaggerated. The reality is that IPPs are professional, fully managed retirement vehicles that remove administrative work from the client while creating long-term tax and retirement advantages.

Once the plan is in place, most business owners see only the benefits: higher contributions, stronger tax efficiency, and a structured path to retirement security.

Although an IPP is not right for everyone, clients deserve to be educated on all the possible options available at their disposal. That is why at The Walch Team of Assante Wealth Management, we take the time to understand our clients' full financial picture and use our 25 years of experience to help them reach their goals.