Retirement Compensation Funding Inc.

Retirement Compensation Funding Inc.

June 23, 2008 12:04 ET

Ending the Pension Shortfall for Canadian Business Owners

Retirement Compensation Funding (RcF Inc.) offers Canadian business owners the solution to an increasing problem - the retirement income shortfall.

TORONTO, ONTARIO--(Marketwire - June 23, 2008) - There is a serious shortfall happening to Canadian business owners. Business Owners who are nearing retirement age, will not be able to achieve anywhere near the level of income they are used to when they retire; whereas executives at large Canadian Companies have their pensions funded at 70% of their final average earnings.

To illustrate the pension gap, let us look at twin brothers, one works for a large public corporation, while the other is a small business owner. They both earn $200,000 a year (indexed at 5%), and will both have 35 years of service by age 65.

The difference is that one of them works for a Public Corporation with a company pension plan and supplemental agreement, while the other one is a Private Business Owner with only an RRSP to depend on for retirement.

The twin in the Public Corporation is expected to have pension income $321,647. This is made up by his corporate pension plans. The twin brother in the Private Corporation will only have an RRSP income of $104,374. That is a pension shortfall of $217,273 per year.

Canadian business owners and key executives nearing retirement are faced with a serious pension shortfall. Most executives of large corporations will retire with a pension of 70% of the average of their average final earnings. However business owners do not have that option, they only have their RRSP funds which won't come anywhere near 70% of their annual income.

According to a recent study by the Association of Canadian Pension Management, the typical pension plan being offered to Canadians "will not contribute meaningfully to an adequate retirement income".

"Private business owners should know that there is a solution to this very serious issue" says Roy W. Craik, President of Retirement Compensation Funding Inc in Toronto. The RCA (Retirement Compensation Arrangement) is Revenue Canada's tool for equalizing a business owner's pension to provide the remainder of the 70% allowed for funding a full pension. The RCA will eliminate the pension discrimination that high earning executives face with Registered Pensions Plans, and is wrapped around the owners RRSP or IPP.

Contributions made by the employer into the RCA are 100% tax deductible to the corporation, and are exempt from payroll taxes. The executive is not taxed until distribution begins from the RCA at retirement. The RCA is a trust and assets may be protected from creditors with a third party Trustee. The RCA can also assist in exit strategy on sale of business for an Owner.

Contact Information

  • Media inquiries/interviews
    Retirement Compensation Funding Inc.
    Pierre Ghorbanian
    (416) 364-6444 x225