When I started at my first full-time job, someone tried to give me some really dumb advice: “Don’t bother joining the pension plan – just take the money and invest it yourself.” At the time, the company offered a defined benefit pension plan and it matched my contributions as part of the benefit.
The person who encouraged me not to join said he was making buckets of money on [nameless popular tech stock], which eventually plunged off the map.
Needless to say, I didn’t take his advice (which was bad advice – very bad advice).
Unless you have a sizeable trust fund waiting for you outside of work, it’s a good idea to join your company pension plan or group retirement savings plan, especially if your employer is willing to pay you to do this by contributing to the plan as well. It’s free money!! And your employer is trying to give it to you. By not signing on, you are essentially turning it down.
There are two basic kinds: defined contribution plans (where you choose your own investments and the benefit you receive isn’t guaranteed) and defined benefit plans (where your money is invested on your behalf and you are guaranteed a set amount upon retirement).
Employers also offer group retirement savings plans. This works just like a registered retirement savings plan, except that it’s run through your employer.
If you’re not sure what kind of pension plan your company has or how it works, then find out and join it right away so you can start saving for your retirement now.