My Pension Account

Written by The Dividend Guy on November 3, 2006

The company I work for has a pretty good pension plan. It is a Defined Contribution plan, meaning that my retirement income from the plan will depend entirely on how the account does from an investment return perspective. If the funds within the account do well, then I will have a better retirement income than if they do poorly!

Basically, the company gives me 2% of my total earnings towards my pension. I then do an optional 2% of my earnings which I pay for. Since I do this, the company turns around and gives me another 2%. Basically, I put in 2% of my earnings, and company gives me 4%.

Every month, this money is forwarded to our pension provider and invested in funds that I choose. There are not a lot of options but I am ok with that as it simplifies things. However, one thing I would like to see is more index funds as an option.

How do I breakdown my investable money that goes into this account you ask? Well, I will tell you:

Fund Name % of Funds
CC&L Group Bond Fund 5%
TDAM US Mkt Index Fund 39%
JF Canadian Equity Fund 36%
JF International Fund 20%

I have chosen this breakdown as it fits the asset allocation that I strive to meet within my broader portfolio. I think it is important to view all your investment accounts as one big account so that you are not overweight or underweight in particular areas.

These funds are not necessarily funds that an individual investor can go out and buy. They are specifically run for pension plans and are managed as such. I have no idea on what MER’s I pay as a pension plan holder, and I may ask the question. I suspect they are lower than “normal” funds sold to individual investors.

The plan has been doing ok – my return year-to-date according to the plan website is 7%. Not bad, but under the market none-the-less. I think if I could select more index funds that return would have been better.


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2 Comments so far

  1. Mark November 3, 2006 5:01 pm

    Wow. You have a really good plan there. Sure, it may have only returned 7%, but of what’s in there you only had to contribute 1/3. It beats the hell out of what I have. Mine will match 100% of my contributions that tops out at $1300 / year with a 4 year vesting schedule. And I couldn’t even get INTO it until being here for a full year.

    After I hit the $1300 I stop contributing and just invest the rest in taxable accounts and IRAs.

    The advantages of a higher amount being invested will performance for along time if your horizon is for decades. You’ll have plenty of time to hit benchmarks. For now, keep on getting that 200% match from your employer.

  2. The Dividend Guy Blog - One Guy’s Journey to Passive Income Through Dividend Investing » Fundamental Investment Research November 5, 2006 9:32 am

    […] My Pension Account […]

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