Un­der­stand­ing em­ployee ben­e­fit pro­grams and mak­ing the most of them

The McLeod River Post - - Viewpoint -

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.

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