You work all your life and pay income taxes, as well as contributing to Canada Pension Plan and Employment Insurance. So what do you get when you retire?
Some people are furious to find their income from government plans adds up to only $12,000 a year. They can’t live on that, so they have to keep working if they can. Not always easy.
And what about the workplace pension plan? You can rely on it for decent lifetime support under certain conditions:
–You have long years of service with the same employer.
–You have a defined benefit plan with automatic inflation protection.
–Your employer does not go out of business or merge with another.
–Your employer doesn’t switch in midstream to a defined contribution plan.
Under a defined contribution plan or group RRSP, employees have the responsibility to invest and manage their savings properly, while on the job and later in retirement. Is this fair?
Employees may have limited experience as investors. They may be given a limited selection of investments with high costs. And if they’re not forced to join the plan, they may just stay out altogether.
Here’s some of the input I got from Star readers on pensions and retirement income.