Small Business 101
Small business 101
How your business can help you and your employees save for retirement
Both you and your employees may have the opportunity to save for retirement. Learn about the available options.
Jul. 15, 2025
6-minute read
As a business owner, when it comes to saving for your retirement, you’re not limited to a Registered Retirement Savings Plan (RRSP).
There are different ways to save for your retirement through your business:
- If your business is a corporation, you can set up an Individual Pension Plan (IPP) for the business.
- Alternatively, your business can set up a Group Registered Retirement Savings Plan (Group RRSP) for you and your employees.
Let’s explore your options.
Individual Pension Plan (IPP)
Interest has been growing in Individual Pension Plans (IPPs). This is because IPPs may allow for greater contributions than are permitted for an RRSP for individual small business owners who meet specific criteria.
What is an IPP?
IPPs are employer-sponsored defined benefit pension plans, typically with one or two members.
Pension benefits — the amount you receive when you retire — from a defined benefit pension plan are generally calculated according to a formula based on factors such as years of service and salary.
An actuarial valuation report determines contributions, which may include increased contributions when funds are not expected to be enough to provide pension benefits. In this case, you know today what the benefits will be at retirement, but the contribution amounts may vary from year to year.
Who can set up an IPP?
A corporation can establish an IPP for owners, managers, key executives or professionals, provided the plan member is an employee of the sponsoring company.
This type of pension plan is generally offered to connected employees only. A connected employee is an employee who directly or indirectly owns 10% or more of the sponsoring company’s shares, or those of any other company connected to it.
Self-employed people operating an unincorporated business as sole proprietor or in a partnership are not eligible for an IPP.
Who can benefit from an IPP?
An IPP can be a valuable retirement savings vehicle if you are:
- An employee of an incorporated business or incorporated professional.
- Receiving T4 income from the sponsoring company. You must be an employee of your corporation. Note: Dividends are not pensionable income.
- Looking for additional retirement income beyond what can be provided within RRSP limits.
- Working for an employer who is willing to set up, administer, and fund the IPP.
Potential benefits to the corporation:
- Allows the sponsoring corporation to make contributions, determined on an actuarial basis, for the current year’s service and lump-sum contributions for past service after 1989.
- If the corporation borrows money to fund the IPP, the interest expense is tax-deductible.
- Allows for business transition and succession planning when family members work for the corporation.
- All actuarial, accounting and administration fees, and possibly the IPP investment management fees, paid directly by the corporation — not from the IPP fund — are generally tax-deductible expenses for the corporation.
Potential benefits to employees:
- Provides predictable retirement income.
- May have higher contribution limits than an RRSP.
- Allows for lump sum contributions for past service after 1989.
- Offers an excellent way to increase retirement assets.
- Plan assets may be creditor protected.
Group Registered Retirement Savings Plan (Group RRSP)
Employee loyalty is essential in today's labour market. By setting up a Group RRSP program, you can give your staff a valuable benefit.
What is a Group RRSP?
A Group RRSP is a retirement savings plan sponsored by you as an employer.
- Your employee opens an individual RRSP but pays into it through you by contributing through regular payroll deductions.
- You may also contribute to your employees’ RRSP on their behalf.
Why establish a Group RRSP?
A Group RRSP can be a way of building employee loyalty and attracting potential talent. Group RRSPs may also provide your employees the opportunity for tax deferral while saving for retirement.
Plan sponsor’s responsibilities
- Establish a Group RRSP for employees.
- Introduce the Group RRSP to employees.
- Provide important enrolment dates to the plan members.
- Share information about the set-up and ongoing maintenance of the plan.
- Maintain and remit payroll deductions for the plan.
The plan sponsor — the company that establishes the Group RRSP — may delegate some or all of these responsibilities to a dedicated service provider.
Benefits of working with an approved service provider:
- Provides the plan sponsor with ongoing support and guidance.
- Simplifies set-up and ongoing maintenance of a Group RSP.
- Provides cost-effective plan options.
- Facilitates any relevant training to help employees plan for their retirement goals.
- Offers customized plans tailored to a company’s specific needs.
- Provides dedicated customer service to the plan sponsor and employees.
Who can benefit from a Group RRSP?
Benefits to employers:
- May help attract and retain talented employees.
- May build employee loyalty by helping employees build savings with potential tax benefits to help them achieve their financial goals.
Benefits to employees:
- May help employees meet their financial goals.
- Offers flexibility to choose investments within their savings plan.
- Simplifies employee contributions through payroll deductions.
Not ready to retire, but still looking to save?
If you’re interested in setting up an IPP or Group RRSP, a CIBC business advisor is ready to help you. Your business advisor can introduce you to an investment advisor at CIBC Wood Gundy. The investment advisor will work with you to help you find the investments that can meet your unique needs. CIBC Wood Gundy offers a complete array of financial products and services, built upon the unified strengths of the CIBC Group of Companies.
To discuss your Business Banking needs
Book a chat with one of our advisors. They can help set you up for success, today and into the future.
Written By
Joseph Campagna
Joseph Campagna is a CIBC Business Banking professional with expertise in deposits, cash management and credit. He has extensive experience developing relationships, providing advice and helping Business and Commercial Banking clients achieve their financial goals.