There are multiple types of employee pension plans. The two main types are: defined benefit plans and defined contribution plans. Regardless of the plan, “the great thing about them is the financial contribution your employer adds, boosts how much you can save for retirement every year,” explains Jean-Michel Lavoie, Sun Life Vice-President, Strategy & Market Development, Group Retirement Services. A bonus, he adds, is that management fees are often lower because of the size of the plan. Plus, you may have access to certain types of investments that tend to be usually restricted to fund managers. In short, contributing to an employee pension plan helps you invest more. Why? Because your employer makes contributions, and you have access to funds that aren’t available to the general public.
Here are three ways to get the most out of your workplace pension plan.
Step 1: Stay informed
First check to see if your employer offers a workplace pension plan. The best place to start is to contact your Human Resources department or your manager. They can also give you the information you need about how to join the plan.
For example, some employers have an intranet for their employees. You can access it and look up any information about your plan and, in some cases, to change your contributions online.
As a general rule, employers will offer a variety of mutual funds. Some employers will even have default funds. It’s often possible, and a good idea, to choose the funds that suit you best. “Choosing your investments wisely is crucial because you could potentially double your returns for your retirement,” Jean-Michel adds.