Do you have a pension fund? Do you know what kinds of pension you have? Will your pension fund be enough for your retirement?
Defined-contribution and defined-benefit pension plans, even Group Registered Retirement Savings Plans, are some common terms in the pension vernacular. Do you know the difference between each of them?
Most importantly, do you know if your pension fund will cover all of your financial needs when you retire?
Defined-contribution pension plans are becoming increasingly popular. In general, the employee and the employer pay contributions that are known from the beginning, at an agreed-upon percentage. The amount accumulated in the plan over time is invested in the markets and generates investment income. The amount accumulated in the plan is known.
As for defined-benefit pension plans, a calculation determines the payment amount at retirement. This calculation accounts for the employee’s salary and years of service. Contrary to other plans, the benefit at retirement is known and guaranteed for the rest of your life. The employer’s and employee’s contributions may vary over time, thereby guaranteeing the benefit at retirement. This type of pension plan can also provide inflation protection.
Group RRSPs are another way of saving for retirement. The employer takes the initiative of opening a group RRSP for its employees with, for example, Caisse Alliance. All employees who participate in the group RRSP have their own account and choose their investments. The employer and employee typically agree on the percentage to contribute.
In reality, there’s a lot more to these various pension funds. But no matter your age, it’s important to understand your pension fund and assess whether or not you have enough saved for retirement.
If your employer does not sponsor a pension plan, Caisse Alliance can help you build your savings.
It’s never too early to think about saving or to start putting money away. Caisse Alliance is here to help. Don’t wait for retirement to learn about your pension fund or to come and see us!
Marie-Pier Robert, B. Com., QAFPTM
Wealth Management Advisor
Credential Asset Management Inc.
Human. Available. Connected.
Mutual funds and related financial planning services are offered through Credential Asset Management Inc. Mutual funds, other securities and securities related financial planning services are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc.