In a December 10, 2024 news release, the Healthcare of Ontario Pension Plan (HOOPP) has announced that incorporated doctors can now qualify for HOOPP benefits in retirement. While the announcement didn’t go into specifics on the cost to the Medical Professional Corporation (MPC) for these benefits it certainly does add another option for doctors to consider when thinking about retirement.
As an incorporated doctor, you have the opportunity to accumulate wealth through your corporation via investments, Individual Pensions Plan (IPP) and now opting in to HOOPP. In addition to this, many doctors utilize salary and dividend strategies as well as, utilizing tax savings vehicles like RRSPs as part of their retirement plan. Any one or more of these planning opportunities can work, the key is to determine which one is correct for you.
Opting in to HOOPP will allow you to participate in a pension plan while still benefiting from the tax advantages of your corporations and should be considered as part of your overall plan. The new offering from HOOPP should integrate seamlessly with your business structure allowing you to contribute to the pension plan without disrupting the flow of your corporate finances.
Some key benefits expected from the HOOPP plan are:
- Tax Efficient: Contributions to the HOOPP pension plan made through the corporation should be tax-deductible, reducing the overall corporate tax burden
- Predictable: Unlike investments that can fluctuate, HOOPP’s pension plan should provide a stable, predictable retirement income
- Long-Term Security: HOOPP offers a well-established, professionally managed pension fund that prioritizes long-term growth, reducing the need for you to actively manage your investments
Some key considerations before opting in to the HOOPP plan are:
- Corporate Cost: What is the overall cost to the corporation of the plan?
- People included: Does this include all of your employees as well?
- Personal Cost: The personal tax cost of the salary requirements to qualify for the plan?
- Limitations: Are there benefit limitations, if any, in retirement?
- Value at Death: The value or transfer of the pension upon death of the doctor before or after retirement
The new HOOPP offering for incorporated doctors represents another option for retirement planning that should be considered. I know I will be keeping an eye out for the details in 2025 to determine if any of our medical clients might benefit from this alternative.
For further guidance on the impact of how the HOOPP affects you and your retirement, please reach out to your Welch LLP advisor.
