Employer Pension Plans
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ToggleYour 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.
Does Your Employer Offer Pension Contribution Match?
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.
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Read MoreAbout The Author
Jessica Morgan
Jessica Morgan is the founder and CEO of Canadianbudget.ca. She is passionate about personal finance and helping Canadians improve their financial literacy by providing more Canadian focused financial content. A millennial mom of one, she 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 is a career public sector employee with a Hybrid Pension, and an advocate for Canadian women to improve their personal finance knowledge.