At one point in my ca- reer, I worked alongside an actuary, who astounded me with his range of knowledge. He could contribute to virtually any discussion with an amazing amount of detail.

One particular strength was his familiarity with the Income Tax Act. He claimed it read like a novel, with main characters (various finance ministers) influencing the plot (their governments’ fiscal objectives) and suspenseful outcomes (unexpected and sometimes illogical clauses and amendments).

I got that same sense reading The Essential Individual Pension Plan Handbook. Author Peter J. Merrick, president of Merrick Wealth Management Inc. in Toronto, tells the story of individual pension plans in an engaging yet informative way, from their beginnings as an obscure section of the Income Tax Act to their vastly underutilized market potential today. Along the way, we are informed, coached and inspired to consider seriously becoming experts in the field and accessing the largely untapped market as a way to enhance wealth at two levels — for qualified clients through the IPPs themselves and for advisors through the significant revenue that can be generated from their sale.

Let’s begin with a definition. IPPs have been called “RRSPs on steroids” because they offer beefed-up tax-sheltered retirement savings for successful entrepreneurs and others associated with them. IPPs are defined-benefit pension plans, each typically for one person or a very select group of employees. When you sort through all the qualifications and benefits, Merrick says, “IPPs offer the best tax and retirement solution plan for individuals 40 years of age and older who have T4 incomes of more than $105,600, who work for an incorporated business and who have historically maximized their RRSP and pension contributions.”

How do IPPs stack up against RRSPs alone? Consider the example of a 45-year-old executive with 15 years’ service and a $100,000-plus income. Maximizing both an IPP and an RRSP, assuming 7.5% returns, would accumulate more than $5 million by age 69, yielding an annual income of about $380,000. An RRSP alone would grow to about $3.5 million and an income of slightly less than $265,000. The additional $1.5 million of assets and $115,000 a year in income would make a significant difference in lifestyle and inheritance.

On the advisor side, Merrick estimates a 49-year-old IPP client acquired today will generate more than $300,000 in commission and fee income over the next 15 years. And the number of plans is expected to grow to 300,000 over the same period, from 8,500 in 2006. Advisors may be looking at $300 billion of new investible assets up for grabs.

The book is divided into five parts and 28 chapters, each of the latter beginning with a brief overview and a statement of the chapter’s learning objectives, so you can determine what sections you want to read individually or in various combinations, depending on your interests. The five parts are:

> Part I: IPP Essentials. This part explains the nuts and bolts of establishing, maintaining and winding up IPPs. It describes the features, benefits, funding, limitations and restrictions. The governing regulations, pension plan standards, accounting re-quirements, and roles and responsibilities are also detailed.

> Part II: IPP Investment Considerations. This section covers the fine points of permitted investments and discusses investment philosophy — in particular, asset allocation, rebalancing and socially responsible investing.

> Part III: Advanced IPP Applications. This deals with integrating IPPs with other employee benefits and also contains an extensive chapter on how retirement compensation agreements can be used to provide additional benefits over and above an IPP.

> Part IV: The 21st-Century Financial Consultant’s IPP Concept Presentation Kit. This part goes beyond an academic treatment of the subject matter. Herein you will find the current implications of being an advisor, as well as ways to amplify your value proposition for clients and position yourself as an IPP expert.

> Part V: Epilogue. With the exception of a “pensionspeak” glossary, this is a hodgepodge of things the author couldn’t fit in elsewhere.

The book is a surprisingly easy read. A financial advisor himself, Merrick has enlisted other “subject matter experts” to add credibility and insight to certain areas. There are numerous caveats and cautions in the book about the challenges of dealing with IPPs.

@page_break@For countereffect, stories, anecdotes, poems and quotes lighten what could be a heavy read. IE