Supplemental Executive Retirement Plans

Supplemental Executive Retirement Plans

The Income Tax Act attempts to give group pension plans and registered retirement savings plan parity and comparable tax benefits. However, once employees reach an income of $86,111 (in 2004), they have maximized their tax-assisted savings under the RRSP and when their income reaches $91,667 (in 2004), they reach the maximum benefit under a defined company pension plan. Some corporations use a supplemental executive retirement plan (SERP) to increase the retirement benefits for senior executives and employees.