How can I wring the most value from my workplace pension?
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Rob Carrick: Martin, how can I wring the most value out of my company pension plan?
Martin Leclair: I would say there are two ways, first of all: maximize your contribution, so in a defined contribution plan or even a group RSP structure, there would be the ability for an employee to make a voluntary, additional contribution.
Rob: Above the usual contribution rates.
Martin: Above the usual. And if this is matched by the employer, I would say go and try to maximize this.
Rob: Okay. So now in some pension plans it’s optional or you have to indicate that you want to join and a lot of times people don’t indicate they want to join. They don’t want to spend the money, they don’t think it’s worthwhile. But they’re missing the matching opportunity. How often does that occur?
Rob: So it’s a serious issue, people leaving their employers money on the table.
Martin:Rob, most people, they do not maximize their room. So they leave money on the table and what I say to plan members is even if you don’t have the ability to contribute to the maximum, at least try a bit.
Rob: Because that bit is being matched by a bit by your employer
Martin: Exactly. And very often if it’s matched 50 per cent or 100 per cent, this is immediate 50 per cent return to a 100 per cent return on this investment.
Rob: Okay so I guess the lesson here, the way to wring the maximum value from your pension plan is to contribute as much as you possibly can and get as much as you can of your employers money.
Martin: Contribute, contribute, contribute.
Rob: Thanks Martin.