
Private sector
So, I have a pension plan with my employer, and it’s personalized. In this case, you must ask some questions to guide yourself more easily:- When can you retire (age or factor)?
- What is the name of your plan (do you have one)?
- Are you going to receive a percentage of your earnings (defined benefit pension plan) or will you have a fixed amount for the rest of your life (defined contribution pension plan or RRSP)?
- What earnings does your pension plan consider (how will it do its calculation)?
- Must you organize it yourselves or are experts in charge?
- If your pension plan is managed by experts, what percentage must you pay?
- Can you choose the amount of money you are going to set aside for your retirement?
- If you change employers, does the plan follow you or can you leave it with the employer?
- Does your pension plan keep up with inflation?
- What are the rules concerning your pension plan (age, percentage, other)?
- In some cases, your best 3 years of earnings will be used to calculate the amount you will receive for your retirement.
- If you are in a defined benefit pension plan, you do not have the choice of paying the percentage of your earnings it imposes.
- If you have the choice of leaving your plan somewhere until you retire, take it. The amount will increase with inflation; it will also increase the interest. In short, the amount will be greater. However, if you withdraw, you will lose all the investments you will have made in the plan and you will have to pay taxes. In some cases, you will only receive the contribution you paid to the plan.
Public sector:
You will find here the features of your pension plan governed by the Public Service Superannuation Act (PSSA). Federal public service employees are covered by the provisions on the pension benefits offered by the Government, which are commonly known as the “public service pension plan.” For the questions you must ask yourself to do your calculations when you want to retire:- How does the pension plan currently operate?
- Are there information meetings you can attend concerning the pension plans?
- The pension plan in the public sector is governed by the Public Service Superannuation Act. There are no optional choices. You must join the pension plan.
- Ask for your pension plan statement each year (if it is not provided to you). In some cases, you will be on probation for 6 months and the statement will come in the year counted after that period.
- Keep a digital or written trail of all the contributions you are going to pay.
- If you change jobs and go into the public sector, leave the plan with the employer. However, if you withdraw your amount, you will lose all the investments you will have made in the plan and you will have to pay taxes. In some cases, you will only receive the contribution you paid to the plan. However, if you withdraw, you will lose all the investments you will have made in the plan and you will have to pay taxes. In some cases, you will only receive the contribution you paid to the plan.
- If you have questions in greater depth, I advise you to go to the Treasury Board Website under the tab “Public service pension plan”.
Personal
Before starting to work for the UCTE, I had my own company. My earnings then depended on the contracts I obtained. In this kind of situation, it’s important to know that no pension plan is imposed. I had no plan for my retirement. You therefore have to create one yourself. This section will be useful to you if you don’t have a pension plan or if you own a company.- What are the different income sources you will receive during your retirement, coming from your work or the government? (CPP, QCC, pension plan)
- Have you made investments or purchased shares?
- Does you family support you or do you support your family?
- What is your current financial position?
- Do you follow a budget?
- Do have income other than employment income? Do you own a company in addition to your work?
- Do you have an automobile loan and insurance to pay?
- At what age will you receive the CPP or QCC?
- Do you have a TFSA (tax-free savings account)?
- I called my bank to meet a personal finance expert, who will help me find an accountant and have me meet a retirement planner. I advise you to call your bank or have an outside meeting to help you manage everything.
- It’s important to make a budget based on the plans you have for your retirement. This budget will help you do your planning and make it feasible.
- If you earn more than $55,000 a year as gross earnings in Quebec, you must pay attention to your taxes. You will be taxed according to the earnings you receive. In this case, you will pay taxes at 27.65% and receive $39,793 in net earnings. Also, everything depends on your province. Click here to see the tax rates on gross earnings per year.