Employer Pension Match

Here is how pension matching, and spending just 10 minutes made me $130k over the last 12 years through my employer pension match.

Employer Pension Plans

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You are among the lucky ones if your employer provides a Defined Benefit or Defined Contribution pension plan, Group RSP or 401k program.

If your workplace provides an employer pension match, taking just 10 minutes to contact your HR department and register for the pension plan is a very easy way to start investing and saving for retirement without worrying too much about how to do it yourself.

Not all companies will offer a contribution matching program, but if yours does, make sure to sign up immediately – or as soon as you are eligible.

Your personal contribution to the pension plan will come out of your paycheck pre-tax, and depending on the type of plan you have, the company may automatically contribute and invest for you in a company-run plan, or you may have control over the account and the investment decisions within it. If this all sounds Greek to you, you have a pension but aren’t sure what it means; we’ve covered that for you here in our Millennial Guide to Pensions.

Employer pension matching

The amazing thing about receiving a match from your employer is that it gives your retirement savings an incredible boost. If you have recently started a position that has a pension, you may be a bit shocked. You may have much less take-home pay then you expected, but actually it is forcing you to save for retirement, and even if you don’t love that, its good for you and will pay off in the long run! I love the forced savings of pension contributions because I never see my portion of the contribution money in my bank account, I am not tempted to spend more and lose out on investing for the future. Also, it is like getting free money – psychologically speaking – even though it’s actually a part of your compensation. The company may have a financial team that runs the pension fund and invests on behalf of the employer. For my situation (hybrid pension that follows DB format), I don’t need to pick stocks, transfer anything extra, or be involved.

I work in the public sector, and many employers offer pension programs. I’ve contributed to a pension with employer match for the last 15 years.

I switched employers during that time and was able to transfer over most of the pension contributions to my new employer’s plan.

Today at 40 years old, I have over $130,000 in that pension account- half of which is due to my employer pension match. This will provide me (based on today’s estimates) somewhere in the range of $5,000 a month when I retire, and more if I remain employed there for years to come.

I never felt stressed about contributing. The money is taken out directly from my pay before it’s deposited in my bank. I never had it in my pocket to feel like I was giving something up.

Does Your Employer Offer Pension Contribution Match?

If your employer offers a pension plan, group RSP or 401k with employer match, signing up should be a no-brainer. You should contribute up until the level they will match your contribution. For example, if they will match 5% of your wages, you contribute 5% Take a few minutes to contact your benefits office and inquire. It may only involve you completing a few forms to get started. Really painless.

If your employer does not offer a pension plan, or 401k, then it all falls on you to prepare for your retirement. You should begin investing as early as you can. Even if you are starting with only a few dollars per pay. Just getting started with an RRSP or TFSA investment account is most important. If you don’t know where to start with investing, you can find out what are the 6 things you need to consider before investing, and then, get a great overview of investing in Canada.

About the Author

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Jessica Morgan is the founder of Canadianbudget.ca and a Millennial mom to one who has a burning obsession with all things personal finance. Jessica has a BA in East Asian Studies from York University and a Masters in Business Administration from Toronto Metropolitan University. She has built a 100k+ portfolio on a public sector salary, and wants to encourage all Canadian women to start investing and improve their personal finance knowledge.