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Planning for the future

Are you saving for retirement on top of your company pension?

JOSH RUBIN BUSINESS REPORTER

RRSP season comes around and you’re not too worried about making a contribution. After all, you’ve got a pension through work. So wouldn’t anything else be gilding the lily?

Not really, it turns out.

In this week’s In Your Corner, we ask the question: “I’ve got a company pension. Do I still need to be saving more for retirement on top of that?”

The short answer is yes. “Your workplace pension might make up a meaningful part of your retirement income, but it shouldn’t be the whole thing,” said Jillian Kennedy, a partner at Mercer Canada, and head of the financial services company’s investment wellness strategy.

For one thing, says Kennedy, office pensions aren’t quite as lucrative as they used to be. Nor, in many cases, do they pay out in guaranteed amounts.

Many companies who still have pension plans have defined contribution plans, rather than the oldschool defined benefit. That means the risk is on the worker, rather than the company, if the pension’s returns are mediocre.

In previous decades, calculations on how much income you’d need in retirement would make assumptions that you owned your home, and that it was fully paid off by the time you retire. With the growing price of real estate, said Kennedy, some people may have mortgages left to pay off, or be renting, when they retire.

If you do decide to add to your retirement nest-egg yourself, Kennedy recommends spreading it around.

Not just which companies or funds you’re investing it in, but which kinds of accounts.

“You shouldn’t just diversify the types of things you invest in. You should diversity the types of things you hold them in. All of us have CPP. Some of us have company pension. If you can, try to have an RRSP and a TFSA, too.”

‘‘ Your workplace pension might make up a meaningful part of your retirement income, but it shouldn’t be the whole thing.

JILLIAN KENNEDY MERCER CANADA

BUSINESS

en-ca

2022-01-17T08:00:00.0000000Z

2022-01-17T08:00:00.0000000Z

https://torontostar.pressreader.com/article/281878711740584

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