-r future salary Wednesday, October 30, 1991 - North Shore News - 41 Value of pension plans not always apparent HOW CAN you tell if you have a good pension plan? In a recent column, | noted that a pension plan can easily be worth several hundred thousand dollars on retirement. But pension calcu- lations 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 pen- sion plan is one of the most valuable benefits provided by your employer,” said Don Smith, a senior vice-president and con- sulting actuary with The Alcx- ander Consulting Group. “Your pension is often worth the equivalent of five or 10% of your salary, and possibly more if it’s indexed -—- even if you are re- quired to make contributions toward the cost of the pension.’’ Pensions also offer maximum tax efficiency. “Both the employer and the employee may deduct the pension contributions, and the investment income in the pension is tax ex- - empt,” Smith said. “You pay tax only when you eventually receive the pension.’” The.longer you stay with your job — or at. teast within an organization that offers trans- ” .ferability of pension credits — the more valuable the pension becomes. . a os : 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 thz employer’s ‘contributions, you cwill often lose the benefit of 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 ap- | Diabetes . authority to speak DR. STUART Ross, one of Canada’s leading authorities on “diabetes, will be the keynote . speaker at ‘‘Diabetes: Me and My Shadow,” ‘an interactive seminar in Vancouver. . Ross is on the Faculty of Medi cine, University of Calgary, and a member of the Federal Advisory Board on Diabetes for Canada. The one-day seminar is for in- dividuals aged 20 to 50 years, who are affected by diabetes. Medical professionals as well as people with diabetes will discuss current issues on insulin-depen- dent diabetes. Sponsored by the Vancouver branch of the Canadian Diabetes Association, the seminar will be held at the Sheraton Plaza 500, on Saturday, Nov. 2, from 8:30 a.m. to 4:30 p.m. Discussion of genetics, risks of pregnancy, family planning 2nd relationships will open the serai- nar, Other sessions include relation- ships and sexuality, nutrition in the 90's, effects of street drugs and alcohol on diabetes, health and eating behaviors, diabetes in the workplace, life insurance for people with diabetes, coping with episodes of low blood sugar, ad- vances in research and what to expect from your family doctor when talking about diabetes. For more information call 732- 1331. Nachael parent, you should make -- or ask for — an estimate of the pen- sion’s present and future value, and use tha: information when you are deciding 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 iemember to look at the after-tax figure wage or salary figure when you do the com- parison,’’ said Smith. Even if you are going to belong to a pension at a 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 guidelines: @ If the pension plan is of the “money purchase’’ type (that means the amount of money earned by the funds in the plan and interest rates when you retire determine the amount of your pension), look for an employer contribution of 5% or more of your pay. : Why people | Montreal @ If the plan is an industry-wide, union-sponsored plan, look for employer contributions of $1 an hour or more. @ lf the plan is the ‘‘defined benefit’? type (in) which your length of plan membership and earnings determine your pension), look for the following features: (1) A pension based on your earnings averaged over your best five years or some shorter period. (2) A pension accumulation rate of 1.5% or more for each year of membership in the plan. (3) Flexible early provisions. (4) Guaranteed indexing, or at feast 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 join- ing a plan,’’ warned Smith. “Waiting until pensions become a priority for you may mean leaving it until it is too late to accumulate an adequate pension.”’ retirement 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. Mike Grenby is a North Skore-based columnist and_in- dependent financial adviser who works with individuals; he will answer your questions as space allows ~ write to him c/o The North Shore News, 1139 Lonsdale Ave., North Vancouver V7M 2H4, ARE YOU CONSIDERING A CAREER IN REAL ESTATE? FREE REAL ESTATE CAREER SEMINAR TUESDAY, NOVEMBER 12, 1991, 7:00 P.M.. TO PRE-REGISTER PLEASE CALL 687-5154 ROYAL LePAGE RESIDENTIAL REAL ESTATE 40 OFFICES IN BC. 370 OFFICES IN CANADA You should turn down the op- ff portunity to join a pension plan “only if you definitely pian to quit your job before your pension will be vested,’? he said. ‘‘Other- wise, joining the pension will usually be in your best financial interests.”” With pension and RRSP reform, many employers are revis- ing their existing and proposed are showing more interest in a Trust GIC 1-year term Minimum deposit $10.000. Interest paid at maturity. 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