By Brenda Spiering and the Sun Life team
You do not participate in the pension plan with complementary contributions offered by your employer? It is as if you refuse the money that is given to you.
Given all the expenses we incur, why should we also join the employee pension plan? Nothing is appealing about having your pay cut every month.
Think you can’t afford to contribute? Instead, ask yourself if you can afford it.
Not joining a pension plan is a financial mistake. Mainly if your employer also contributes to your project.
According to JimYih, a group retirement plan advisor, it’s like refusing money given to you. “Your plan is optional, and you do not benefit from the contributions paid by your employer? You are missing out on a golden opportunity,” he sums up.
Mr Yih recommends considering the following 5 points:
- Contributing to your pension plan starts now
Are you at a new job? Now is the time to join the employee pension plan. The sooner you start saving and taking advantage of employer contributions, the more money you’ll have in retirement. - A diet at work is a safe bet
Some employers offer additional contributions. This means that the employer pays a percentage* of your donation into your account. Your savings grow faster. It’s pretty simple!
(*Depending on what your employer agrees to and what is in terms of your pension plan.)
How do employee pension plans work?
- Participating saves taxes
Your registered plan contributions and earnings are tax-sheltered. You will pay tax later when you withdraw your money.
In addition, if you contribute by payroll deduction, you reduce the tax payable. What do you mean? Because you are contributing with money that has not yet been taxed. As with an RRSP, your contributions reduce your taxable income.
- Save a little today, get more tomorrow
An employee pension plan requires you to contribute regularly. It’s sometimes unique how much all those small amounts add up to overtime.
What are the types of pension plans? (video)
- It’s never too late to start contributing
The earlier and more often you start saving, the more money you will save. But no matter when you adhere to the diet, it is always to your advantage.
Need help understanding your retirement savings options?
By joining the pension plan offered by your employer, you will optimize your retirement savings. If you don’t have a workplace pension plan, you can set up your plan. Either way, a SunLife Financial advisor can help.
