Do you pay into a pension?
For my entire adult working life, I have paid into some form of a retirement fund at work.
My first post-university gig offered a group RRSP, where the company matched up to a certain amount. Even though I didn’t know a lot about investing at the time, I knew enough to take advantage of that match.
And it worked out well for me — by the time I left the newspaper after close to six years, I had about $20,000 in RRSPs to take with me.
The plan at my current job is a little different: instead of RRSPs, it offers a pension.
It’s been three years since I started paying into the work pension fund. And for all three of those years, I have put off learning a single thing about my pension because….reasons? I don’t really have a good answer for why, honestly. It’s just one of those things that I have been procrastinating on for far too long.
So when the email went out about the annual meeting, I put it in my calendar.
Here’s what happened.
Why I went to the pension meeting in the first place
I went to the pension meeting for one reason: because I don’t know anything about my pension.
OK. That’s not totally true.
Going into the meeting, I knew who managed our pension and how much I contribute each month. In addition, I was aware of the fact that the plan switched to a shared risk model a few years ago (a change that has not been popular among some plan members). However, I didn’t know what that meant (or if it’s something I should be upset about). Honestly, I still don’t.
My goal going into the meeting was to leave with a basic understanding of how the pension is performing and what to expect moving ahead. Since I’m only 30 years old — and thus a little far off from pension-drawing time — I figured this would be the most useful information I could take away.
How the meeting worked
The meeting took place on a Wednesday evening at a local hotel.
When I arrived, I followed the signs toward the ballroom-type room where the meeting was taking place. In the room, I picked up three things: a copy of the annual report, a one-pager with quick facts about the pension and a headset for the simultaneous translation, as some of the presentation was going to take place in French (I live in a bilingual province, so this is common).
After gathering my materials, I sat at one of the 25 tables facing the stage at the front of the room, where the members of the pension board sat in a long row. There were two screens at each end of the line to display the presentation (one English, one French). There were also a couple microphones set up around the room.
The agenda included four parts: an overview of the pension, a breakdown on the performance from an actuary, a review of how our investments did and a question and answer session at the end.
The entire thing ran about two hours from start to finish.
What I learned about my pension at the meeting
My goal from the meeting was to walk out knowing how our pension is performing — and I’m pleased to say I accomplished that goal.
Between the presentation by the actuary, the remarks from the executive with the investment firm that manages our fund and the actual report, I was able to see exactly how our fund performed last year, as well as in years past.
Without going too deep into the details, I learned the goal for our pension is to get a 4.75 per cent return — and usually, we exceed that. In fact, last year was one of the only years in recent history where we didn’t at least achieve that. We still posted a return in 2018– a little more than one per cent — which is good news, especially where so many investments lost money in 2018. According to the fund managers, things have looked a lot better in 2019.
I also learned that our pension is something like 125 per cent funded — which is a good thing, because it makes it possible for things like cost of living increases to happen. As far as the managers are concerned, right now, things are looking good for the next 15 years or so.
So…not the best return in 2018, but it could have been worse and things are looking good in the medium term.
The unsurprising part of going to the pension meeting
I was sitting at the table and leafing through the report, trying to make some sense of the information when a middle-aged couple asked if they could join me.
The conversation that followed included an observation that I was…younger than the rest of the crowd. In some cases, significantly so.
This didn’t come as a shock to me. Before I arrived, I assumed I would be one of — if not, the — youngest people in the room. I’m only 30 years old — I won’t be drawing my pension for at least another 30 years. Why bother learning more about something that won’t affect me any time soon?
I get that. Even when I reflect on what I learned while I was there, I can acknowledge some of the information — particularly during the Q&A section — is not all that applicable to me right now.
So why bother going?
Why you should learn about your pension — even if you’re not retiring any time soon
Put simply: I went to the pension meeting because I think it’s important to know where my money is going.
Contributing to my work pension is not optional. It’s something every full-time (and even some part-time and contract employees) pay into, whether they want to or not. It comes off your pay cheque automatically.
And even though I don’t have any control over what happens next, I do think it’s good to be aware of where that money is going and what it’s doing.
Why? Because keeping up with how the fund is performing can give you a better idea of what other steps you might need to take to prepare for your retirement.
Having an awareness of your pension performance can help you determine how much you should be saving and investing on your own to have the kind of retirement you want.
And that’s information that’s better to have sooner as opposed to later.
Even though we’re not going to be retiring any time soon, I know saving for retirement will be something Jeff and I focus on more in a few years time.
Understanding the pension gives us some helpful information for that work.
Going to a pension meeting as a 30-year-old was a strange experience but I am glad I went.
Understanding how my pension has performed and what’s expected over the coming years is useful information to have, especially as we work on our debt-free journey.
Have you ever gone to an investment meeting? What did you learn?