what you should know about pensions scaled

Freedom 55 is but a dream for most of us. A slogan created by an insurance company to push its products became something to look forward to for many. Early retirement will be a reality for very few seniors in Canada. Most of those who will be able to retire at that age will be backed by a pension which is provided at the taxpayer’s expense. For the rest of us there are several options.







Most seniors did not have a pension option when they were employed. For the many self-employed, that pension could only have come from their savings. Your pension will come from your own savings, through a job related programme and/or benefits that you will receive from the government. These are benefits which you have paid into throughout your working life.

Employer Pension Plan

Some employers will offer a pension plan. You contribute a certain amount of your salary to this and the employer will also contribute. This amount will then be invested and when you retire, you will have this amount to add to your other pension benefits from the government.

There are different types of employer pensions. A defined benefit pension is one in which you will receive a specific amount that is guaranteed. This is based upon how many years you worked for your employer as well as how much you invested in the plan. There is also a defined contribution pension. With this type of pension you will have some input on how your pension money is invested. However, there are no guarantees on the amount you will eventually receive. Keep in mind that if your employer should go bankrupt, you will receive less than you originally expected.

Retirement pensions are also available through the government. These include CPP/QPP and OAS as well as the GIS. To read more on these pensions and also on saving for retirement, click here.