Funding the Individual Pension Plan
Once the actuary has estimated your retirement benefits, the annual contributions needed to fund those benefits are calculated.
The annual contributions compounded at a 7.5% net annual rate of return will ensure your plan has adequate assets to provide your retirement benefits. A valuation is completed every 3 years by your actuary to ensure the plan stays on track.
Shortfalls in plan assets normally require further contributions to put the plan back on track. This tax-deductible additional funding can be made over a period of up to 5 years. By the same token, if a surplus is generated in the plan, the sponsoring corporation may be required to take a contribution holiday.
Reprinted with permission from Gordon B. Lang
President & Chief Executive Officer
Gordon B. Lang & Associates Inc.
http://www.gblinc.ca/