When in A Work Transition 6 Ways to Maximize Your Total Compensation From Your Employer

You monthly pay cheque is only part of your total compensation that you receive from your employer. In working with people in transition to a new employer or new position within their existing company we have found 3 common concerns.

1.      Paying too much tax

2.      Not maximizing their company benefits

3.      Unsure if saving enough for retirement now that they have a new job.

This article will focus on point 2 and present typical benefits that can help you increase your total compensation if used correctly.

The first area we find people don’t maximize benefits is getting the matching dollars from their employer in a Group Retirement Savings Plan (Group RSP). Many companies offer such a plan, however, it is often is not mandatory to join. This means that the Employee needs to take the initial action. Once enrolled in the Group RSP, the company will often match what you deposit to a percentage of your income. We typically see a 3, 4 or 5% match for a Group RSP. If your base pay is $ 55,000, then a 3% match is $1,650. 

Having Scottish heritage I would say to someone who does not sign up for a company benefit that offers matching dollars. “What are you …Daft, you are leaving $1,650 on the table”

The second benefit we find to maximize is Defined Contribution Pension Plans (DCPP). There is a mandatory requirement for the employee to contribute to these plans, again, say 3% of your salary and the company will match 3%. However, in the fine print of employee booklet occasionally the company will allow “voluntary contributions” to the pension and these “voluntary contributions” MAY have a matching provision. We just pointed out to a client who joined a new company that if they stopped their monthly contribution to their bank RSP and deposited into their company’s pension using the “voluntary contribution” provision the company would give them 20% of their deposit up to 5% of their income. After 5 years with the firm they would match 50%. The deposit is tax deductible like a RSP but with additional 20% return to them each year. It pays to read the fine print.

Large employers that are listed on a stock exchange often allow employees to pay roll deduct the purchase of company stock with no commissions, with a discount to market price and will match your contributions. One company located in London will match 50% of company stock you buy up to 5% of your income. Using $80,000 then 5% is $4,000. The company will give you $2,000 of additional stock each year.

If you don’t invest, you don’t get a 50% return on your money.

Work can be stressful. Massages are a great way to relax. Many employers’ benefit plans allow $500 per year for massages. In fact, as I write this article I pulled out a Sun Life booklet that a client just dropped off for me to review. Their benefits plan will cover 80% up to a maximum of $500 per year for the following services.

·        Licensed psychologists or social worker

·        Licensed massage therapists

·        Licensed speech therapists

·        Licensed physiotherapists

·        Licensed naturopaths

·        Licensed audiologist

·        Licensed dietitians (50% of Americans are type 2 diabetic or pre diabetic)

·        Licensed occupational therapists

·        Licensed chiropractors

·        Licensed podiatrists or chiropodists

Your health is your wealth, using your benefits plan to MAINTAIN your health is ideal, however, I find most don’t use these covered services or use them when they are sick only.

If your career or job requires a license, then governing bodies often have continuing education courses to be taken that are required to maintain the license. In many a meeting, a client will tell me they spent money taking a course or went to a conference. When I ask if their employer will cover the cost, they answer “I don’t know”. It is not uncommon to get an email a few days later telling me they checked with HR and to their surprise the company will reimburse.

Make sure you have a good dialogue with your HR department.

Out of country medical coverage is often purchased when traveling to the United States. I have been surprised by the number of people who have that coverage included in their company benefits plan but buy the coverage for a trip to the United States because they forgot they had it. Sure it is only 40 or 50 dollars but I would call this money down the drain.

Finally, unused vacation days. Not always, but we see people whose employer have no roll over provision in their vacation day. For whatever reason, people let a few vacation days expire in the calendar year. We suggest staying on top of your scheduling so this does not happen.

Watch the nickels and the dollars will follow. These scenarios may be applicable or they may not. Employees that maximize their benefits could get a pay raise of up to 4 to 8%...., however, if you don’t take the matching RSP, the voluntary pension contributions and buy company stock if available then they don’t get the pay raise. Multiply that over a decade and a few small tweaks can add substantially to your net worth.

Print this article out and go talk to your HR department or a Certified Financial Planner (CFP).

If you are in Transition to a new job or got a promotion you may want to read this article I wrote.To read the article click here.

Live well

Lance Howard CLU, CFP

519-850-6565

[email protected]

P.S If this article has piqued your interest,comment below. We have many more resources to make sure you are maximizing your financial affairs at work.We have a checklist to cover off most situations.

E-mail or PM me for a copy.

This writing is for general information purposes only and is not intended to provide legal, account, tax, or personalized financial advice. Any opinions expressed are those of the author and may not necessarily reflect those of IPC Investment Corporation.