Not all pensions are created equally, so choose wisely

financialpost.com:

By Chris Warner

Pensions of all types appear to be the same to many people: save money during your working years and get a stream of predictable income in retirement.

But choosing whether to enrol in something such as a multi-employer pension plan (MEPP) or an individual pension plan (IPP) can be difficult to fully assess because the differences are nuanced. You may as well ask someone from abroad to point out the differences between a Newfoundlander and an Ontarian. Said person might only reply, “They’re both Canadian?”

In reality, we are aware that even with the shared nationality, there are typically significant differences between individuals. This holds true for pensions as well, which is a topic that has gained considerable attention this year and has personally impacted my household.

After 13 years of education and specialization, my partner, a specialist physician, is reaching a stage in her career where she must decide the most suitable approach for saving for retirement. Consequently, we have been comparing the options of MEPP and IPP for incorporated professionals and business owners.

Upon conducting a thorough comparison, my perspective as a financial professional leans towards the benefits of an IPP. It provides greater flexibility and long-term potential for retirement and intergenerational planning. The higher an individual’s earnings, the more advantageous an IPP appears.

On the other hand, an MEPP may be a suitable choice for investors who possess limited knowledge or interest in this field, or those who prefer not to take on the responsibility of managing their own finances. Essentially, it is an option for individuals who lack the in-depth knowledge required to formulate a retirement savings strategy