Group retirement plans are not your only option

Upon entering the workforce, one of the first things you are informed about is the amazing group retirement plan or pension plan that your company has. If you put X dollars away each month, the company will match it dollar for dollar or you can receive a set pension for life.  Everyone looks at this as an amazing deal. You can get a 100% return on your investment or money for life in retirement - why would you not take it? What they don’t tell you is that the group plan really has no guarantees and the company owns the policy.

When I entered the workforce after university, I too took advantage of the amazing group plan that was provided to me. I put the maximum amount away. I received the company match, invested that as well, and my returns were amazing. I thought this was guaranteed money and things could not get any better. However, after 3 years of working for this company, they changed their group plan without notice. The company match was lowered and the number of investment funds was decreased, which resulted in those amazing returns that I thought would continue long into the future to drop drastically. This is when I learned that I had to take my retirement plans into my own hands.

The downfall of Sears Canada has recently brought this issue to light, with pension plans being frozen for many retirees as the company has fallen into financial disrepair. Now, with Sears Canada closing all of their remaining stores for liquidation, the pension plans are in limbo. Pensioners are not considered primary lenders and therefore, there is no obligation for Sears Canada to pay out any pension to them. All of the current pensioners and employees could lose all of their retirement savings and pension plans. All of their hard work and savings are now gone due to the company's inability to succeed.

Group plans can be an amazing feature with company matches and can help you invest for your retirement. However, they should not be the primary or sole source of income for your retirement. Utilize personal RRSPs and TFSA to take personal responsibility and control over your money. Be smart with your money and have all of the angles covered to ensure your future is successful.