Individual Pension Plan (IPP) for Muslim Physicians in Canada

Your corporation has money your RRSP can't reach

If you are an incorporated physician, dentist or business owner, you know the feeling. Your corporation keeps building up retained earnings, and your RRSP keeps hitting the same ceiling every year: $33,810 in 2026, whether you are 35 or 60.

For Muslim professionals there is a second question on top of the tax one: where can this money grow without riba?

An Individual Pension Plan, or IPP, answers both questions. After more than 27 years in this industry, it is one of the most underused tools I see among incorporated professionals over 40.

What an IPP is, in plain language

An IPP is a personal pension plan that your own corporation sets up for you. Think of the pension a hospital or the government gives its employees, built for a company of one, or one family.

• Your corporation is the employer. It makes the contributions and deducts them as a business expense.
• You are the member. The money grows tax deferred until you retire.
  
• An actuary, a specialist in pension math, calculates how much your corporation may put in each year based on your age, your salary and your years of service.
  
• The plan is registered with the Canada Revenue Agency (CRA), just like an RRSP.
  

One rule matters a lot: an IPP is built on salary (T4 income), not dividends. If you have paid yourself only dividends, the plan has little to work with. In 2026 the pension reaches its maximum at a salary of about $196,600.

How much more you can save than with an RRSP

Your RRSP limit is the same at every age. An IPP is different: the older you are, the more your corporation can put in. The two are about equal around age 40. After that, the IPP pulls ahead every year.

The IPP has three more ways to put money in that an RRSP simply does not have:

1. Past service. If your corporation paid you a T4 salary in earlier years, the IPP can recognize those years. Part of it is covered by moving some of your RRSP into the plan. Your corporation funds the rest as a large, one time, tax deductible contribution.
2. Top ups. The CRA assumes the plan earns 7.5% a year. If it earns less, your corporation can add more money, and that top up is also tax deductible.
   
3. Terminal funding. When you retire, your corporation can make one more deductible contribution to improve your pension, for example to retire earlier or to fully index it to inflation. If you are selling your practice or business, this deduction can help offset the tax on the sale.
   

Here is what that looks like in a 2026 illustration from iA Financial Group for a 50 year old earning $196,600, retiring at 65:

• RRSP only: $2,583,000
• IPP, no past service: $3,124,000
• IPP with 25 years of past service: $3,785,000

That is about $1.2 million more for the same person, in the same years, mostly funded with dollars your corporation deducts. The illustration assumes a 5% yearly return and 3.5% yearly salary increases. Your own numbers depend on your age, salary history and how long you have been incorporated.

Sources: iA Financial Group IPP brochure, 2026 and CRA 2026 limits

Is an IPP halal?

Yes, when it is set up and invested the right way. The plan itself is a pension your corporation promises you as part of your pay. What decides whether it is halal is where the money is invested and how you take it out at retirement.

"But the CRA uses 7.5% interest." This is the question I hear most. The 7.5% is not interest anyone pays you. It is an assumption the actuary must use to calculate how much your corporation is allowed to contribute. No bank lends you money and no one pays you a fixed rate. If the plan earns less, your own corporation adds money to keep its promise to you. That is an employer funding a pension, not riba.

What keeps your IPP Shariah compliant:

• A written investment policy that says halal only. Every IPP needs an investment policy. Yours should name Shariah screened funds and exclude bonds, GICs and interest bearing cash.
  
• Shariah screened investments. Companies are screened to remove alcohol, gambling, conventional banking and similar businesses, and to limit how much debt and interest income they carry.
  
• Purification. If a small part of a fund's income comes from impure sources, that amount is given to charity each year.
  
• The right choice at retirement. Many advisors will tell you to buy an annuity from an insurance company when you retire. Conventional annuities are built on interest. The halal route is to keep the IPP and draw your pension from the Shariah screened portfolio, or move it to a locked in account invested the same way.
  

If you want extra peace of mind, review the plan with your own scholar. Most will focus on exactly the points above.

The other benefits most people miss

• Bigger corporate deductions. Every contribution, plus the actuarial and administration fees, is a business expense for your corporation.
  
• Protection from creditors. An IPP is a registered pension plan, so its assets get the same creditor protection as any workplace pension. For physicians and business owners facing lawsuits or business risk, that matters.
  
• Your family can be part of it. A spouse or child who works in the corporation and earns a salary can be included, and the plan can continue to benefit your spouse after you pass away.
  
• Pension income splitting. IPP pension income can be split with your spouse, which can lower your family's total tax in retirement.
  
• A predictable retirement income. You know the pension you are building toward, instead of guessing what a pile of RRSP savings will turn into.
  

Who an IPP is not for

An IPP is powerful, but it is not for everyone. I would rather tell you that now than set up a plan that does not fit.

• You are under 40. At younger ages your RRSP usually gives you as much room or more, with less paperwork.
  
• You pay yourself mostly dividends. No salary means little or no pension to fund.
  
• Your corporation's cash flow is uneven. Once the plan is in place, your corporation is expected to fund it, including top ups after a weak market.
  
• You want flexible access to the money. IPP money is locked in for retirement. Minimum yearly withdrawals start the year you turn 72.
  
• You are not ready for the upkeep. There are setup costs, yearly filings and an actuarial review every three years. All of it is deductible, but it is real work, and it should be done by a team that does it often.
  

Also know that IPP contributions reduce your RRSP room going forward, the same way any workplace pension does.

If you are an Ontario physician, you may also have been offered Medicus. I compare the two in IPP vs Medicus.

Find out what an IPP could do for you

The only way to know if an IPP beats your RRSP is to run your own numbers: your age, your salary history and how long you have been incorporated. I work with a pension actuary to build a side by side comparison for you, at no cost and with no obligation.

In one complimentary review you will see how much your corporation could contribute this year, what a past service contribution could look like, and how to keep every dollar invested in a Shariah compliant way.

Click here to book a Zoom meeting with me, or reach me at 905 966 0066.

Pierre Zgheib · Branch Manager · More than 27 years helping Canadian families and professionals plan for retirement · Licensed in Ontario, British Columbia, Alberta and Nova Scotia

This article is general information, not personal tax, legal or investment advice. IPP rules and limits are those in effect for 2026.