Retirement Planning in Ontario
Retirement planning ensures you’re prepared for the future with tailored strategies for income, tax efficiency, and estate planning – so you can retire with peace of mind.
Our Ontario retirement advisors design tailored plans to meet your needs
Planning for retirement can feel overwhelming, but with the right guidance, it becomes a clear and confident journey. At Acera Insurance, our Ontario retirement services team works closely with you to understand your financial goals and insurance needs. We draw on a wide range of investment and insurance products to help you build long-term financial security, protect your lifestyle, and maximize the value of assets you pass on to your loved ones.
It’s never too early to start planning for your future. Whether you live in Toronto, Ottawa, the Niagara region, or elsewhere across Ontario, our retirement advisors are here to help you create a personalized strategy that reflects your priorities. From leveraging retirement savings tools to exploring effective taxation strategies, we’ll ensure your plan supports you today and into the future.
Connect with one of our Ontario retirement planning experts today to get started or continue reading below to learn more about the strategies and solutions available to you.
For Ontario companies, group retirement starts with a sustainable plan
Do you think money managers’ fees are fair? Most pension plan sponsors – especially companies with established plans – have an understanding that investing fees are high. However, many don’t recognize which high-priced investments inhibit positive portfolio growth. In most cases, once a plan is established their advisors become inattentive and fail to monitor performance.
A poor performance of funds can seriously hurt your members’ ability to save properly for their retirement. Here is an actual case we observed:
- A member with $50,000 invested in a moderate portfolio
- The amount grew to $68,000 in five years
- If the same amount were invested in another carrier’s moderate portfolio but with better fees, that amount would have grown to almost $90,000
- That’s a substantial difference of $22,000, or 32% higher in the same time frame
Seeing an example like this, you may be wondering, “Am I getting the most out of my plan?”
Acera Benefits helps maximize your plan to its full potential
Acera Benefits specializes in reviewing pension plans, recommending better investments and finding lower management fees. Through our national alliance, we are connected to a preferred pricing network that typically finds 20 – 25% lower fees than most impartial advisors would have access to. Similarly, our comprehensive analysis considers your company’s specific demographics and matches them to the appropriate carrier. We succeed when you and your plan members fulfill all financial goals. Better fees are out there. Let us help you find them.
Understanding the power of lower fees
Maintaining the status quo with your current retirement plans can create a false sense of security. Plans are not being reviewed like their group health benefit programs and depending on the size of a retirement plan, the investment management fees (IMFs) could be half the cost of their entire benefit program.
Through a simple formula used in our complimentary audits, Acera Benefits continually identifies plans that are slated to lose tens of thousands of dollars upon maturity because of poor investments, lack of engagement and disproportionately high fees. Even a good retirement initiative will derail quickly using the standard tactics. Sadly, employers don’t even recognize the failure of their plans because it is “the way benefits have always been done.”
Review your retirement objectives with us to get back on track
Decision makers have different priorities and that’s why it is important to identify everyone’s objectives. For example, if an employer determines that employee satisfaction is the long-term goal and cost management is the short-term goal, the company must find a way to allocate dollars between the health plan and retirement plan to facilitate both objectives.
Companies should also have a basic understanding about how their investment management fees work. At a minimum, employers should sit down once a year to review their fund lineup and how the plan is doing compared to other companies of the same size and in the same industry. They should know what their fees are buying them and what they will get in return – that’s the “power of lower fees.”
Examples of group retirement solutions for Ontario employers and their employees
Tax-free Savings Account (TFSA)
This flexible savings plan allows employees to earn investment income tax-free and pay no tax on withdrawals. Contributions aren’t tax-deductible because investors contribute after-tax dollars and the investment income earned in the account, along with any reported losses or gains, aren’t taxable.
Registered Retirement Savings Plan (RRSP)
This is a retirement savings account with tax advantages. Contributions made are generally tax-deductible, and the money grows on a tax-deferred basis until withdrawn in retirement, at which point it will be taxed as income.
Deferred Profit Sharing Plan (DPSP)
This is set up by employers as a way to share profits with their employees. Contributions are made by the employer, depending on the profits of the company or at a pre-determined amount. Contributions are tax-deductible to the employer within certain limits, and money grows tax-deferred until withdrawn, when it will be taxed as income. A DPSP often supplements a group RRSP.
Retirement compliance with CAPSA guidelines
The Canadian Association of Pension Supervisory Authorities (CAPSA) is a national association of pension regulators with the mission of facilitating an efficient and effective pension regulatory system in Canada. It works to develop practical solutions that promote coordination and harmonization among pension regulators nationwide.
The CAPSA Guidelines are designed to support the continuous development and improvement of industry practices. Canadian pension regulators generally expect registered pension plans to adhere to the CAPSA Guidelines. However, individual pension regulators may communicate their specific expectations, and registered pension plans in those jurisdictions should comply accordingly.
Visit capsa-acor.org for more information and updates.
Do you know if you are CAPSA compliant?
We understand the challenges companies are faced with trying to ensure their organization complies with the CAPSA Guidelines. Our independent assessment tool has three objectives:
- To help you understand your compliance responsibilities as well as those of the other parties involved in your company CAPSA.
- Identify shortfalls and an action plan to meet compliance requirements
- Identify action plan for each party involved with your CAPSA Plan – your custodian, plan sponsor or Acera Benefits.
If you would like your organization to be on the Path to CAPSA Compliance, please contact us for a free initial consultation.
Individual retirement solutions for Ontario residents
Ontario residents have a variety of choices for personal retirement planning, including RRSPs, IPPs, and annuities.
Registered Retirement Savings Plan (RRSP)
RRSPs are an important planning instrument for Canadians, especially because of their tax advantages.
There are two main tax benefits:
- You can deduct contributions against your income. For example, if your tax rate is 40%, every $100 put into an RRSP will save you from paying $40 in taxes.
- You get a tax shelter from any capital gains or income earned inside of an RRSP. This means that, over the long run, you can truly put your money to work for you through compounding.
The fundamental principal behind RRSPs is that you are delaying the payment of taxes from the time when you are usually taxed higher (income earning years) to a time when you are taxed less (retirement). The hope is that this will encourage people to save for retirement earlier rather than later, when it may be too late.
Individual Pension Plan (IPP)
Designed for owners and key employees of incorporated small businesses, an individual pension plan is exactly what it sounds like – your own version of a company pension plan.
Registered with both the provincial and federal governments, IPPs are governed by the same legislation that governs regular pension plans. Contribution amounts are based on a number of factors, including your age, income, length of service with the company, the rate of return achieved within the IPP and the rate of inflation. These on-going contributions can be higher than the contribution limits of an RRSP. Contribution amounts are calculated by an actuarial service, with a tri-annual evaluation to ensure that the IPP is achieving the prescribed rate of return over a three year period. Contributions become a corporate deduction, as opposed to the personal deduction for an RRSP account. An IPP replaces your RRSP.
There are four opportunities to fund an IPP. In addition to the on-going contributions, IPPs have the option of past service contributions, fully indexing the IPP to inflation at retirement, and the purchase of a “bridge benefit”.
The past service contribution is possible when you have been employed by the corporation for several years, without the benefit of the IPP. Past service allows you to receive credit for the time that you worked before the IPP started. Fully indexing the IPP to inflation allows for a lump sum contribution at retirement. The actuarial calculations used for the on-going contributions use a factor of inflation minus 1%. At retirement, which coincides with the sale of the business for many small business owners, there is an opportunity to fully index the plan to inflation. In other words, you can ‘make up’ for the running deficit that exists because of the inflation minus 1% calculation.
This is a tremendous tax-sheltering opportunity, at a time when you have the money available. The bridge benefit is applicable to those retiring before age 65. It is designed to cover the gap between your retirement, and receiving the Canada Pension Plan and Old Age Security. Similar to the fully indexing option, the bridge benefit provides an opportunity to tax shelter a lump sum, which for many will coincide with the sale of their business.
Annuities
Annuities are flexible, tax-deferred insurance products designed to help you achieve long-term financial goals and provide a source of retirement income.
An annuity is essentially a contract between you and an insurance company. In return for your payment, the insurance company agrees to pay you income at some future time, usually retirement. With no limit to the amount you can contribute, annuities allow you to create your own tax-deferred retirement plan. Though many types of annuity plans exist today, all generally allow you to choose when and how much you will contribute, as well as when and how you will withdraw your money.
Tax and estate planning for you and your beneficiaries
Our Acera Benefits team in Ontario specializes in the areas of tax, estate, financial and investment planning.
Through our experience, we have found that business owners are faced with very unique opportunities and responsibilities. The success and failure of a business is often placed on the shoulders of owners. Most of our clients have not had the time to take a step back and examine their changing/growing business over the years.
Unfortunately, because of your business’s growth and success you are no longer protected by the basic coverages of a group benefits plan. We have seen how improper planning can cause tax inefficiencies, income loss, failed family income protection, failed business protection and much more. We want to help you with these challenges.
Since there is a strong incentive for business owners to accumulate profits inside their corporation, owners accumulate investment assets within their corporations.
The Challenge
While active business income receives favorable tax treatment, the same cannot be said for investment income. As shown on the chart below, interest income and the taxable portion of capital gains earned within a corporation will be generally taxed at an average rate of 47%.
| Federal Tax Rate (A) | Average Provincial Tax Rate (B) | Average Combined Tax Rate (A+B) | |
| Tax Rate on Investment Income Earned inside a Corporation | 34.67% | 12.34% | 47.01% |
If you buy property or an asset that doesn’t generate income, you will be taxed as a capital gain on the sale. In other words, 50% flows through the CDA to you (the shareholder), while the other 50% is taxed at 47% to the corporation; and then once again to you the shareholder while you are alive–or to the estate–upon death.
Tax and estate planning is not a particularly popular topic, but having a comprehensive plan in place is important for not only you, but your beneficiaries.
It is always important to seek professional assistance prior to implementing any type of retirement planning. Connect with one of our local advisors to make sure you and your loved ones are financially secure – now and in the future.
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