Your financial health is similar to your physical health – comprised of many components that work together to ensure you stay healthy and secure. And although all are as important as the sum, one component is especially crucial for its strength and longevity. For your body, this might be your muscles. But in your financial health, this is your defined benefit (DB) pension.

When you retire, there are normally a few savings streams that will make up your income; including personal savings and investments, government pensions and your DB pension. The most credible experts suggest that you need to replace somewhere between 50% – 70% of your pre-retirement salary, depending on the lifestyle you’re looking to have. Your DB pension is the core strenght of your retirement health because you are guaranteed a lifetime retirement income.

First, let’s look at the properties of government pensions. The Canada Pension Plan (CPP) and Old Age Security (OAS) are both government income programs meant to provide retirement income for Canadians when they transition from the workforce. Although both important contributions to your retirement income, they are often not enough to supplement your retirement income entirely. The maximum CPP pension amount in 2022 is about $15,000 a year, but the average Canadian gets around half that amount. Along with OAS, which pays from $8,000 to $9,000 a year, depending on your age, that might not meet all your income needs.

Fortunately your CAAT DB pension has the biggest return on investments for your contributions. According to one recent study* for every dollar contributed to a large, jointly governed DB pension plan like CAAT, you are estimated to receive $5.32 in retirement income, which is a lot higher compared to an individual savings plan. The longer that you and your employer contribute to the Plan, the larger your monthly pension will be when you retire. Your contributions are usually paid back to you in the first five years of your retirement, but your pension keeps going as long as you live. So, in the end, you get a quick and more significant return on your investment.

When transitioning from working to retirement, it’s important you feel confident knowing that you’ve got the solid support you need to take care of yourself in your next chapter. A DB pension has got the arms of steel needed to provide that much-needed support and peace of mind, so your financial health stays in top shape on your new journey.

*HOOPP, The Value of a Good Pension, 2021