About 39% of working Canadians have a workplace pension plan. Statistics Canada puts the number at just under 6.1 million, as of Jan. 1, 2011. Coverage is falling. Back in 1997, 42% of working Canadians had a pension plan. While the percentage of women with a plan has held steady at 40% during that time period, coverage for men has dropped from 43% to 37%.

Workplace plans come in different shapes and sizes, of course. While it’s true that even the least generous plans are better than nothing, it’s important to understand what kind of plan you have and what it does and doesn’t promise.

Four very basic questions to ask:

1. Defined benefit or defined contribution?

There are two main types of retirement plans. Defined benefit plans provide a guaranteed level of annual pension income when you retire. Defined contribution plans — an umbrella term that includes defined contribution pensions, group registered retirement savings plans and others — provide you a personal account that you invest with. Your retirement income is determined by how much your investments earn for you. One of the benefits of a group plan like this is that members pay much lower investment fees than retail investors pay.

2. How is my final payout calculated?

Don’t assume that just because you’re a member of a defined benefit plan that you’re set for life. Payout calculations are typically based on how many years you work for the company and what you earn during those working years. Learn these details now; they should be a factor in any decision you make down the road to switch employers or retire.

3. Does your employer match any of your contributions?

In a defined contribution plan, employers often match your contributions up to a certain level each year. It’s free money that a remarkable number of eligible employees leave on the table. Know what your employer pays, and take full advantage.

4. How do I stay on top of the details?

Pension plans are administered primarily by financial services firms and large public sector funds. Among the services provided by these organizations are various tools, communications and educational materials. These are designed to boil complex plan details down into simple, plain-language terms. Use them. And if you don’t understand something, contact your pension plan provider and ask.

Our government-funded Canada Pension Plan and Old Age Security program are admired around the world. The other two main elements of our retirement income system — employer plans and personal savings — are equally well respected. A financial advisor can help you understand how each of these three pieces (along with any employee benefits you have access to) fit together.