Company Retirement Plans
No employee benefits package today is complete without some form of retirement plan. Ask most modern professionals and they will tell you their retirement plan is an essential part of the remuneration package. If you're new to a company and you're tossing up whether or not to join your company's retirement scheme, bear in mind that it could be your best friend in your twilight years so it pays to invest when you have the chance.
Most companies today offer some type of enforced savings scheme for the future. If your firm doesn't offer an Employee Savings Plan, chances are that it offers a retirement or pension scheme. These schemes are more popular today than ever before given the increased awareness of the dangers of being unprepared for retirement.
Your company's retirement plan sets aside a portion of your salary each month which is invested into the scheme. Generally these schemes offer a tax free form of saving and help to encourage individuals to invest in other forms of individual saving. Most plans are either defined contribution plans or defined benefit plans. Defined contribution plans may include profit sharing schemes and stock plans. Defined benefit plans allow employees to decide the amount they wish to contribute and plan accordingly for retirement or early retirement on the basis of these contributions.
The most important aspect you need to think about when entering into a scheme is how your contributions will help you toward your goal of retirement. Does your plan limit you in any way and is your employer matching your contributions? Can you increase or decrease the amount you need to contribute to the plan and are there any penalties associated with an early withdrawal of funds? These questions should be addressed to your employer so that you fully understand the type of retirement plan you are participating in.
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