Fact Sheet - Terminal Funding
Reviewed November 3, 2026. Figures are for 2026 unless stated otherwise.
When a business owner is selling the business or about to retire, transferring assets can trigger tax consequences. Personal Pension Plans (PPPs) do offer a retiring plan member with a one-‐time opportunity to upgrade the basic pension promised under the plan with additional benefits. The most common ancillary benefits include:
· Unreduced early retirement pension, within CRA limits (generally from age 60, 30 years of service, or when age plus service reaches 80)
· CPP bridge payments
· Indexing to Consumer Price Index
These benefits must be funded by the corporation sponsoring the PPP, assuming it has additional cash on hand. When a corporate sponsor of a PPP makes a one-‐time contribution to the PPP to settle the cost of the ancillary benefits, it can claim a supplemental tax deduction against its corporate income.
This process is known as “terminal funding” and generally happens when the member retires.