Understanding Employee Benefit Programs
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 …
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? It’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. Your 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. You may be required 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 require. For 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.
- If 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.
How to protect your family by Great West Life / London Life and Canada Life
Your employer-sponsored benefits should merge seamlessly with your personal financial plan. Your professional advisor can help make sure that happens. You are welcome to contact Dave and his team for assistance at 519.886.2360 ext 6364 or book your first meeting by clicking here.
- 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.