Remember that old pension plan you had with your previous employer? Whether it was a defined benefit plan, a defined contribution plan, or even a group RRSP, there’s a good chance that if you leave it there until retirement you’re leaving money on the table for a couple of reasons.
1. You’re probably paying a lot in fees.
Many employer-sponsored defined contribution plans and Group RRSP plans invest your funds in high-fee mutual funds that strip the returns from your investments. These fees are called Management Expense Ratios (MERs) and have a direct and negative impact on how fast your money grows. The higher the fees, the higher the chance your funds will perform poorly.
2. You’re not getting any financial advice.
Paying higher fees can be worth it if you’re willing to sacrifice some of your returns in exchange for advice from the company/advisor managing your funds. However, while many employer-sponsored retirement plans have high costs, many don’t come with financial planning services. You were probably offered a list of funds and had to make your own decisions on what to invest in which can lead to poor long-term performance if you’re not sure what you’re doing or don’t have the time to do the research.
Are you well diversified? Are your investments well aligned with your goals, time horizon, and risk tolerance? Are you rebalancing regularly? Are your investments tax-efficient? Making sure these questions are answered through proper financial advice is so important to help you maximize your retirement funds and ensure you retire comfortably.
How do you win by transferring your pension to Wealthsimple?
Transfer your old pension to Wealthsimple and get your first 15,000$ managed for free for 1 year.
We provide world-class, long-term investment management without the high fees and account minimums associated with traditional investment managers. We invest your money in a globally diversified portfolio of low-cost index funds modelled after the same Nobel Prize-winning research used by the world’s savviest investors.
Financial advice included
Our financial advisers are also always available when you need them. They can help plan your financial milestones and answer questions you might have about potential risks or what sort of investment accounts you should have.
Have more at retirement
Our cutting-edge technology helps you optimize your portfolio and lower your tax bill. This means we do things like automatic rebalancing, dividend reinvesting, and tax loss harvesting—services that most people couldn’t afford until now or found too time-consuming and tedious to do on their own.