Business TheReview Wednesday, November 20,1991 — A28 How fo fell if you have a good pension plan How can you tell if you have a good pension plan? In last week’s column, I noted that a pension plan can easily be worth several hundred thousand dollars on retirement. ~ But pension calculations usually baffle the ordinary individual — and often even the experts — so assessing the likely future value of your plan can be a challenge. “Participation in a good pension plan is one of the most valuable benefits provided by your employer,’ said Don Smith, a senior vice-president and consult- ing actuary with The Alexander Consulting Group. “Your pension is often worth the equivalent of five to 10 per cent of your salary, and possibly more if it’s indexed — even if you are required to make contributions toward the cost of the pension.” Pensions also offer the maxi- mum tax efficiency. “Both the employer and the employee may deduct the pension contributions, and the investment income in the pension is tax exempt. You pay tax only when you eventually receive ‘Buf, warned Smith, you stand fo lose much of your pension’s value if you change employers’ the pension.” The longer you stay with your job — or at least within an organization that offers transfera- bility of pension credits — the more valuable the pension becomes. But, warned Smith, you stand to lose much of your pension’s value if you change employers. “Even if your pension is vested, which means you will gain from the employer’s contributions, you will often lose the benefit of future salary increases on your pension,” he said. Employers offer attractive pen- sion plans to encourage employees to stay. Although the value of your pension is not always apparent, you should make — or ask for — an estimate of the pension’s pre- sent and future value, and use that information when you are decid- ing about a job change. “The loss to your pension of changing jobs might be higher than any gain in pay at the new job — and remember to look at the after-tax figure wage or salary figure when you do the compari- son,” said Smith. ; Even if you are going to belong to a pension at the new place, two short-term pensions could easily be worth less than one long-term pension. What are the important features of a good pension plan? Smith suggested the following guide- lines: — lf the pension plan is of the “money purchase” type (that means the amount of money eamed by the funds in the plan and interest rates when you retire determine the amount of your pension), look for an employer contribution of five per cent or more of your pay. If the plan is an industry-wide, union-sponsored plan, look for employer contributions of $1 an hour or more. If the plan is a “best average earnings” type of plan (called a “defined benefit” plan, in which your length of plan membership. and eamings determine your pen- sion), look for the following fea- tures: (1) A pension based on your eamings averaged over your best five years or some shorter period. (2) A pension accumulation rate of 1.5 per cent or more for each year of membership in the plan. (3) Flexible early retirement provisions. (4) Guaranteed indexing, or at least a track record on the part of your employer of regular ad hoc pension increases after retirement. (5) Survivor benefits, whether you die before or after retirement. (6) Fair benefits in case you leave the job, including the right to transfer the value of those benefits to another pension plan or RRSP. How does the pension plan you are considering — or perhaps your existing plan — measure up? You might ask the person in charge of the pension about the preceding points, and note the replies. “Whatever you do, don’t put off making a decision about joming a plan,” warned Smith. “Waiting until pensions become a priority for you may mean leaving it until it is too late to accumulate an ade- quate pension.” You should turn down the opportunity to join a pension Successful marketing for small businesses Successful marketing for small and home-based business is the topic of a two-session workshop sponsored by the Saanich Peninsu- la Chamber of Commerce. Selling tips, how to design effec- . tive advertising promotions, tap alternative markets and get into public sector contracts are some of the things that will be covered. Sponsored in part by the B.C. Ministry of Economic Develop- - ment, Small Business and Trade The War Amps CHILD AMPUTEE PROGRAM For information dial toll-free area codes 519, 613, 705, 1-800-268-8821; other area codes dial 1-800-268-8917 Ni) NATIONAL REAL ‘~ ESTATE SERVICE « NNRS BLOCK BROS. REALTY LTD. BEACON AVE. - SIDNEY 656-5584 A CAREER IN REAL ESTATE Have you ever considered a career in real estate sales? Why not explore the opportunities? We offer some of the most exciting, successful marketing tools and programs in our indus- try and ongoing training that is second to none. Sound interesting? For com- plete details call today. Registra- tion deadline for next course November 29/91. BERNIE WILKINSON NRS BLOCK BROS. REALTY LTD. 656-5584 (the latest title for the ministry), the cost is $35, down from the suggested cost for private individ- uals of $175-$200, said workshop coordinator Valerie Stanley-Jones. Modelled after the highly- successful level I series, this work- shop II focuses on successful mar- keting tip that small business owners can use. It starts Tuesday night in the to Nancy White Sidney Safeway Employee of © the month SNGHATOLTONS SAFEWAY Central Saanich Cultural Centre in Brentwood Bay with a four-hour session to continue at 6 p.m. Thursday, Nov. 28. Participants lean to quickly cat- egorize customers and how to apply the most effective approach technique while putting the cus- tomer at ease and closing the sale. The Chamber urges people to pre-register by calling 656-3616. (§) Canada Safeway Limited * ha eee plan” only if you definitely plan to quit your job before your pension will be vested,” he said. “Otherwise, joming the pension will usually be in your best finan- cial interests.” With pension and RRSP reform, many employers are revising their existing and proposed plans. Some are moving to money purchase plans or group RRSPs from defined benefit plans. Be sure you understand your options and as Smith said, make a decision one way or the other. If you don’t join a program at work, you should have your own retire- ment savings plan in place. Desktop Publishing Newsletters, Resumés, General Typesetting & Layout to Camera-Ready We Work To YOUR Deadlines MAC & IBM Compatible sea Line lype & Graphics Open Saturdays 655-1900 9764 Fifth St, Sidney WHAT'S YOUR HURRY, B.C? YOUR LOCAL POLICE GICBC ABOUT STRAIGHT TALK — YOUR MONEY. [fi TT I ES dan |Febl {Mer [Aor Mayon) Duty ag a (Rates Subject to Change without: Notice) RON GURNEY FINANCIAL SERVICES LTD. FINANCIAL CONSULTANTS - LIFE UNDERWRITERS SUITE 6 — 9843 2nd St., SIDNEY (In Marina Cour) 656-2411 DO YOUR OWN: * Powerful free publicity * Useful customer market surveys I NEO manual MARKETING WORKSHOP FOR SMALL AND HOME-BASED BUSINESS LEARN HOW YOU CAN * Inexpensive, successful advertising | PLUS Gate POWERFUL TIPS ON SELLING: % Quick clues to categorizing) your. clients 2 * How to sell to these types =s 5 * Selling to big business or government * Finding different markets for your slow times and MORE! WHEN: Tues., Nov. 26 (6 - 10 p.m.) ~ continued Thurs., Nov. 28 (6 - 10 p:m.) WHERE: Central Saanich Cultural Centre 1209 Clarke Road, Brentwood Bay }sJUSINESS COST: $35.00 + GST for full course and feENTRE PHONE TO REGISTER: 656-3616 Saanich Peninsula Chamber of Commerce ~ Fa] = @ eS ZA NOUNCEMENT Pemberton Holmes (Sidney) 3 Lid., is pleased to wel- come Terry Moorehead io its team of professional Sales Associates. Born in Vancouver, Terry, his wife Marilyn and their two (children??), McGee and McGinty now reside-in North Saanich. With a background in broadcasting and real estate, he understands the value and necessity of good communi- cation. If you’re thinking of buying or selling, make your move with Terry Moorehead. 656-0911 PEMBERTON. HOLMES 58