Understanding employee benefit programs and making the most of them
When you first began working for your employer, you signed up for a number of benefit plans – but do you really know what you signed up for « or not signed up for? ,t’s important to know because there may be gaps in your coverage or you could be paying for benefits you don’t need. So, to be sure you and your family are getting the benefit from your benefit programs, here are a few tips
Know your plans
• Read the booklets for your benefits plans to be sure you know what you are entitled to receive.
• Read the periodic notices you receive and look carefully for changes. Employers can revise or terminate plans but must give you plenty of notice.
Know what type of retirement plan your employer offers
• A Defined Benefit DB pension plan provides a pre-set pension for your lifetime from the time you retire. With a DB plan, the amount of your pension benefit is set according to your length of service and your salary, and may or may not be indexed to inflation.
• A Defined Contribution DC pension plan does not guarantee the amount of your future benefits. <our retirement income for a DC plan depends on accumulated contributions and the investment returns earned by these contributions.
• A Group RRSP can be offered by your employer in addition to, or instead of, a formal pension plan. <ou may be reTuired to make the full contributions or your employer may subsidize them – in either case, the total contributions to your Group RRSP and any personal RRSPs cannot exceed your personal annual maximum contribution limit as set by the Canada Revenue Agency.
• Deferred Profit Sharing Plans DPSP are paid for by an employer and often restrict investment to the employer’s stock. The retirement benefit depends on how well the investment performs over time.
Know about potential limitations and gaps in your health benefits plans
• Group benefit plans may not provide all of the coverage you reTuire. )or example, group disability insurance can have vital limitations or gaps. Most plans cover only a percentage of your salary and ignore any pre-disability income from overtime and bonuses.
• ,f you and your spouse both belong to work-related plans, you may be doubling up on coverage and costs. Compare your individual plans and eliminate dual coverage items.
<our employer-sponsored benefits should merge seamlessly with your personal financial plan. <our professional advisor can help make sure that happens.
This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell any investments. Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.