Fact Sheet - Understanding the Power of Additional Voluntary Contributions
Reviewed November 3, 2026. Figures are for 2026 unless stated otherwise.
The INTEGRIS Personal Pension Plan is a collection of three distinct subaccounts (defined benefit (“DB”), defined contribution (“DC”) and additional voluntary contributions or “AVC”).
When a PPP member saves under the defined contribution option, the employer makes a mandatory 1% of T4 income contribution. The employee can also make voluntary contributions of up to 17% of T4 income, as long as total DC contributions (employer plus employee) stay within 18% of pay and the annual money purchase limit ($35,390 in 2026). These voluntary employee contributions are then deposited inside of the AVC subaccount of the PPP – and treated as if they were DC assets.
This employee contribution has the effect of reducing personal income taxes owed since it is an employee contribution. Someone paying at a marginal tax rate of 45% and contribution to the PPP would receive a tax refund of $45 for every $100 made to the pension plan’s AVC account.
The AVC account serves another purpose: to receive RRSP assets held at other financial institutions. Because the RRSP annuitant received tax assistance when he or she contributed to the RRSP, a transfer of RRSP assets into the AVC account does not trigger any new deductions1. Once RRSP assets enter the PPP®, they become pension money subject to the applicable provincial pension legislation, which in many provinces exempts pension money from seizure by creditors. How far that protection reaches for withdrawable AVC balances depends on the province, so get advice for your situation.
The other consequence is that since voluntary contributions (and RRSP transfers) are not used to purchase past service under the plan’s DB component, they are not subject to provincial locking-‐in rules and can be withdrawn from the pension plan prior to retirement age. A transfer to another RRSP can take place by using a CRA Form T2151.
Under the terms of the PPP®, plan fees, including investment management fees on the AVC account, are payable by the sponsoring company. When the company pays them, they are generally deductible to it as a business expense. For example, if a $1,000,000 RRSP is transferred to the AVC account and the sponsoring company pays a 1.5% investment management fee, the company would have about $15,000 a year of deductible expense, an amount that changes with the size of the assets.
This deduction is in addition to the regular deductions that the corporation would claim either under the DB component or DC component of the PPP.