Earn More by Maximizing Your Employee Benefits
When looking for a new job, many people focus on their salary. How much you’ll make is easy to understand since it’s a defined number, but it doesn’t always make sense to look at just your base pay. It’s also important to consider the additional benefits offered since that will give you a clear picture of what your overall compensation package will look like.
There are some standard benefits you’ll want to know about right away such as your health and dental plan. But, there are some additional things such as a pension plan or employee stock plan that could be incredibly valuable to you. Then again, there are sometimes non-monetary benefits that may appeal to you. Let’s look at some employee benefits and how you can maximize them.
Employer pensions
Pension plans are incredibly rare these days, so if your company offers one, you should sign up ASAP! It’s important to understand that every pension plan is different, but they essentially come in 2 forms.
Defined contribution – With defined contribution (DC) pensions, your employer will match any contributions you make toward your retirement savings up to a set percent (roughly 1-5%). Generally speaking, you’ll usually need to invest in mutual funds that are specifically offered by your employer’s benefits provider or partner, but you may be allowed to transfer those funds out later. Keep in mind that you still need to invest this money.
Defined benefit – The holy grail of employee benefits is the defined benefit (db) pension since it’s a guaranteed amount that you’ll get when you retire. The amount you’ll get paid is based on a combination of your best earning years and time served, so this can be a highly lucrative benefit. Although DB pensions are secure, if your company mismanages their money, there could be a shortfall later – just look at Sears as an example. Now if you’re getting a DB pension as a government employee, you likely have nothing to worry about.
Regardless of which type of pension you have access to, consider them free money and sign up as soon as you can.
Employee Stock plan or profit sharing
Some companies offer their employees a stock purchase plan which allows you to buy stock at a discounted price. Every plan is different, but it might be something such as a 25 – 50% discount on stock up to 10% of your income. In other words, if you net $4,000 in salary a month, and your employer offers you 50% off stock up to 10% of your salary, then you could purchase $400 in stock at a discount every month. Although the company stock may go down in price, you’re getting free money right off the top since your employer is offering you a discount right away. Keep in mind that there’s usually a vesting period of 1-2 years before you can sell that stock without paying a penalty.
With profit sharing, think of it as a bonus that’s based on company profits. If your company does well, then you’ll get a bigger bonus. Profit sharing is not as common these days, but it’s still something to consider if an offer is made with a lower salary than you expected.
Health benefits
Drug and dental plans are pretty standard, but how much you get every year differs per employer. Some employers offer different plans so you can choose what type of coverage you need while others have a set amount that’s the same for all employees. If you have joint benefits with your spouse, be sure to look at each plan and how much your paying in premiums to determine if you both need full coverage.
What you should look into are additional benefits such as an Employee Assistance Program (EAP) that would give you access to psychologists, marriage counsellors, or other trained professionals that can assist you through your times of need.
Of course, there’s also other professional services you may have access to such as massage therapists or chiropractors. With these benefits, be sure to submit your receipts and doctors notes so you get reimbursed.
Insurance
Insurance is an important benefit and can affect you in a few different ways. Some companies offer life insurance which pays out 1.5 – 2 X your annual salary in the event of death. This isn’t a huge amount in the grand scheme of things, but it’s a good complement if you have a separate life insurance policy.
Disability insurance is also something you want to look into. Short-term disability covers the majority of your income in the event if you’re unable to work due to an injury. How long it lasts varies, but generally speaking, it won’t last longer than 3 months. Once your short-term disability ends, long-term disability kicks in where you’ll be paid about 50 -70% of your salary. The length of your long-term disability also differs by employer, so you’ll need to check your employee handbook. What makes disability insurance so important is the fact that you’ll still be earning an income even if you’re unable to work.
Another type of insurance that’s often overlooked is travel insurance. If your employer offers travel insurance as a benefit, it usually refers to just travel medical insurance. This is good since it’ll cover you in the event you need to seek medical attention outside of Canada, but you’d likely still have to purchase trip cancellation/delay as well as lost or delayed baggage insurance on your own. That being said, some of the best travel credit cards in Canada have a comprehensive travel insurance package included so do check the details of your card.
Non-monetary compensation
Sometimes employee benefits have no dollar value formally attached to them, but clearly they’re worth something. For example, some offices offer a fully stocked kitchen with snacks, drinks, and perhaps even alcohol. Some companies even have a subsidized cafeteria on site with hot meals.
Fitness has also become a big thing as of late. It’s not uncommon to see employers offering discounts on gym memberships or even a set amount that you claim on anything related to fitness such as yoga, boot camp classes, and even CrossFit training.
Finally, there’s flex time which is arguably the most valuable benefit out there. Paid sick days are fantastic, and if you’re lucky, you’ll have an employer that allows you to work from home from time to time. Many employees these days value their time with families more than anything else, so if you’ve found an employer who’s flexible, you may have hit the jackpot.
The final word
It doesn’t matter if you’re looking for a new job or you’re happily employed, it’s important to look at all the benefits available to you. If you can, maximize any benefit where there’s a monetary value, but don’t ignore the other benefits which can improve your lifestyle.
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