“Say goodbye to tension and hello to your pension.” —Unknown
Historically, Canadian physicians have always had to plan for their retirement independently through RRSPs, investments, and other means. In recent years, pension plans have become available to doctors, with some restrictions in certain provinces. Today, we will discuss what a pension is, what types of pensions exist, and which pension plans are available to Canadian doctors.
What is a Pension?
As per the Financial Services Regulatory Authority of Ontario (FSRA), a pension is “the monthly, annual or other periodic amounts that start being paid to a member at retirement and that continue for the rest of his or her life.”
The main advantage of most pensions is guaranteed income for your entire life. That means you don’t have to worry about outliving your retirement savings, alleviating some of the burden of retirement planning.
What are the Types of Pensions?
Federal Pension Benefits
First, let’s review the federal pension benefits available to all Canadians.
Canada Pension Plan (CPP):
- Offered by the federal government
- Eligibility: worked in Canada between 18 and 70 years of age and paid into CPP
- You can start to receive monthly payments between the ages of 60 and 70, and this continues for the rest of your life
- Payments increase to account for the rising cost of living
- The CPP benefit alone is not enough to live off of, but it can be part of your retirement income (for example, the average monthly amount paid for a new retirement pension at age 65 in January 2025 was $899.67).
Old Age Security (OAS):
- Offered by the federal government
- The monthly payment you receive if you are 65+
- Eligibility: Canadian citizen or legal resident of Canada (past or present); have resided in Canada for at least 10 years after age 18 if you live in Canada, or resided in Canada for at least 20 years after age 18 if you live outside Canada.
- Must be repaid in part or in its entirety if your income exceeds the threshold amount. The threshold amount is defined as an income of $93,454 in 2025.
Pension Benefits through an MPC
If you are a physician with a Medical Profession Corporation (MPC; more on Incorporation later), you may be eligible for other pension models. Before we review these, let’s first review some terms.
- Defined benefit plan (DB): a pension plan that guarantees a specific payout upon retirement and lasts your whole life.
- Defined contribution plan (DC): a pension plan to help accumulate retirement savings; retirement income depends on total contributions and investment returns.
Many nuances distinguish a DB vs. a DC plan, which is beyond the scope of this discussion. The main difference is that in a DB plan, you receive a guaranteed monthly income for life after retirement; in a DC plan, monthly retirement income depends on a few factors and is not guaranteed to last your lifetime.
Here are the types of pension plans you could use through an MPC:
Multi-Employer Pension Plan (MEPP)
- Allows unrelated employers to pool resources and share costs to offer pension benefits
- May be DB, DC or a combination
- Costs are lower since they are shared among all members
Individual Pension Plan (IPP):
- Option for MDs who are incorporated and receive a salary from their MPC
- Recommended for those aged 40+
- Contributions made by the MPC to an IPP are tax-deductible
- IPP investment growth is tax-sheltered
- DB only
- IPPs can be expensive. They may include set-up fees of $5,000, annual administration fees of $1,000-$2,000, and an actuarial valuation every three years costing around $1,500
Personal Pension Plan (PPP)
- Similar to an IPP with subtle differences
- Option for MDs who are incorporated and receive a salary from their MPC
- Recommended for those aged 40+
- Contributions made by the MPC to a PPP are tax-deductible
- PPP investment growth is tax-sheltered
- A hybrid of DB and DC
- Fees can be expensive
Plans Unique to Physicians
When you think about pensions, a large group pension like the Public Service Pension Plan for federal government employees may come to mind. In such a model, both the employee and the employer (Government of Canada, in this case) contribute, and the employee is eligible for a pension after decades of service. Now, pension plans designed for physicians are becoming available.
Here is a list of available pension plans for Canadian physicians, current to 2025.
Medicus
- A MEPP
- Created by MD Financial Management Inc. and Scotiabank
- Eligibility: physicians with an MPC in Alberta, British Columbia, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, and the Territories
- Non-physicians are not eligible
- Your MPC makes contributions to the pension plan
- Investment decisions are made for you
- Pension income is predictable and lifelong
- Learn more here
Healthcare of Ontario Pension Plan (HOOPP)
- A DB MEPP plan established 65 years ago for the Ontario healthcare community, now open to incorporated physicians.
- Eligibility: physicians with an MPC practicing in Ontario, your MPC pays you by salary, and your MPC must be a member of the Ontario Hospital Association
- Investments are managed for you
- Pension payments start from retirement and are lifelong
- Contributions are deducted from your salary, reducing your taxable personal income. Contributions made by the MPC are tax-deductible.
- Both members (you and your employees) and the employer (your MPC) make contributions.
- Any new full-time employees of your MPC must join HOOPP when hired. New part-time employees of your MPC can join HOOPP at any time during their employment. Existing employees of your MPC, predating your MPC joining HOOPP, can choose to join HOOPP at any time.
- Family members are not eligible to join HOOPP unless they are physician owners of the MPC.
- Learn more here
Canadian Physicians Pension Plan (CPPP)
- A federation of IPPs/PPPs set up by the MPCs of physicians
- Eligibility: physicians anywhere in Canada receiving a salary from their MPC
- MPC contributes to the pension plan
- Investment management fees are tax-deductible to your MPC
- Learn more here
Here is a summary of pensions for Canadian physicians:
The Bottom Line
A pension may or may not be your best choice, depending on where you live, if you are incorporated, and the pension’s cost. However, certain types of pensions offer security in the form of guaranteed lifelong income, which is worth considering. Talk to a financial planner to see if joining a pension plan as part of your retirement strategy is right for you.
I hope you found this discussion helpful! This concludes The Personal Finance Series. Join me next time as we start our next series on The Doctor’s Dream Team, a review of the key advisors every doctor should have.
Until then, be well,
Laura
Disclaimer
I am not a certified financial advisor/planner, accountant, insurance broker, or lawyer. The content of this blog is for informational purposes only and is designed for a Canadian physician audience. The information provided does not constitute professional financial, tax, investment, insurance, or legal advice.
Readers should:
- Understand that every financial situation is unique
- Consult qualified professionals before making any financial decisions
- Not rely on this blog as a substitute for personalized professional advice
The views and opinions expressed are of the author and do not represent any affiliated organizations, including but not limited to L.J.A. Medical Communications Inc. The author does not warrant or guarantee the accuracy, completeness or usefulness of this information. Any reliance a user places on such information is strictly at the user’s own risk. The author does not assume any responsibility or liability for any actions taken based on the content of this blog.