If I was starting out working I would definitely go for a Defined Contribution Pension at work. Under these plans everyone get the same amount of money. If you are in a Defined Benefit Pension, there is a very low amount your employer puts in when you are young. If you move on a new job, there is very money from the pension plan for you. At least that is what happened to me.
I had Defined Benefit Pensions in the first job I worked at and got very little from it because I moved jobs when I was young. When you leave they discount the money owed you from the retirement age. The discount rate that was used was relatively high for the time.
I worked for Confed when it went bankrupt. Because it was 1994 then pension plan had a surplus. Most pension plans at that time did, unlike today. Some of us compared the amount we got from the pension plan. I was older and did not do badly. Others who had worked there for 20 years as I had, but were younger got very little.
If you have a government job for life with a Defined Benefit Pension you can do very well for yourself. This would be like the Ontario Teacher’s pension plan. However, even in government, not everyone stays for life. You do not know what the future holds so go for the Defined Contribution Pension.
On my other blog I wrote yesterday about Reitmans (Canada) Ltd. (TSX-RET.A, OTC-RTMAF)... learn more. Next, I will write about Canadian Utilities Ltd (TSX-CU, OTC-CDUAF)... learn more on Friday, May 11, 2018 around 5 pm.
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