Congratulations on your new job! There’s a lot to learn when you join a new organization. You will probably meet a lot of new people, fill out a lot of forms and have a few decisions to make.
You may be signing up for your employee benefit plans, for instance. They could be plans for medical and dental coverage. You may also have the choice of signing up for group life insurance and perhaps a company pension plan.
This primer sums up some of the more common benefits people receive at work. It suggests questions you may want to ask your new employer about these benefits. You’ll also find a checklist of key steps you may need to take when you start a new job.
About your pay
Your pay may include one or more of the items on this list:
- base pay
- commissions
- overtime pay
- bonuses, profit sharing, merit pay
- stock options (usually for senior managers)
- travel/meal/housing allowance (again, usually for executives).
Once you start to receive your pay, you may have extra money to save and invest. To learn more, watch this video about Investing in your early years. Or, read:
To help you grow your savings, consider one of these options:
Questions to ask:
- Can I arrange to have my pay deposited directly into my bank account?
- When will I receive my pay? How often?
- What amount will I receive with each pay cheque?
- Will I be able to earn commissions, overtime, bonuses or extra pay? When will I receive these extra payments?
- Will I receive vacation pay?
- Do I get paid for public holidays?
- Does the company match my contributions to company savings or pension plans?
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About your paycheque
When you accept a job offer, your employer tells you what your total pay equals. This is called your ‘gross’ pay. It is not likely the same number as the amount you will see on your pay cheque. The pay you receive equals your gross pay minus any:
- unpaid leaves of absence
- payments you make for your employee benefits
- contributions you make to a company savings plan
- company pension contributions
- deductions for Employment Insurance, Canada Pension Plan and taxes
- union or other professional dues
- donations to charity
If you’re just starting your first job, reading your pay stub can be confusing. Learn more now about tax deductions from your pay.
| Tip: Each year by the last day of February, your employer must send you a summary of your pay and the deductions you paid for the year that just ended. This form is called a T4 slip. You must file it with your tax return each year. Learn more now from the Canada Revenue Agency about your T4 and the information it provides. |
Questions to Ask:
- What deductions will come off my pay?
- How much tax will I pay? You don’t want to pay any more than you have to. Learn more now.
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About your benefits
Your company may also offer certain benefit plans. Some employers offer better plans than others. It’s best to find out as much as you can before you accept a job offer. Why?
Every benefit your employer offers has a value. For instance, if your company pays for life insurance or puts money in a pension for you, those are costs you don’t have to pay for yourself. That’s like putting money back in your pocket.
In fact, your benefit plans can add up to more than 40% of your total pay. So if two jobs offer the same pay but one has better benefits, think carefully. The difference in what you receive can really add up over the years.
| Tip: It is usually less costly to join a benefit plan at work than to pay for these kinds of benefits on your own. Be sure to check how soon you are covered. With some plans, you may have to wait to join. In other cases, you can sign up and start your benefits right away. The rules vary from plan to plan. |
Your employee benefits may include:
- medical and dental plans. Through these plans, your employer may pay some or all of your medical and dental costs.
- sickness and disability pay. These plans cover you if you are sick or injured and cannot work. For instance, you may earn “sick days” as you work. You may also qualify for long-term sickness and disability insurance. Learn more now.
- vacation pay. You may earn paid vacation days as you work.
- life insurance. Many people get their life insurance through work. It’s easy and it will likely cost less than if you buy on your own. In many cases, you can pay for a term life policy without having to fill out a medical history form or have a medical exam, and have the premiums taken right off your pay. Learn more now.
When you start work, your employer will give you information about your choices. You will also receive enrolment documents that you must complete and sign to join these plans.
Questions to ask:
- When does my coverage start?
- Do I pay all or part of the cost of my benefit plans? How much will I pay?
- Do my plans cover my spouse, my children or other dependants?
- What happens if I am already covered under my spouse’s plans?
- What are the rules and restrictions of my benefit plans?
- Can I decline to join any of these plans?
- How do I file my benefits claims?
- How much of my pay will I receive if I am sick or injured and can’t work?
- Can I take sick days to care for a sick child, spouse or other family member?
- How much vacation pay will I earn each year?
- How much will my life insurance plan pay if something happens to me? Can I buy more coverage through my work plan?
- Who can I name to receive money from my life insurance plan after I die?
- What happens to my benefits if I leave this company?
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About your pension
If your company offers a pension plan, it can be a good source of income after you retire. If you’re new to the workforce, retirement can seem a long way off. But starting to save early can really boost your savings. And if your company matches all or part of what you contribute, your savings will grow even faster. It’s like getting free money for your retirement!
To learn more about how saving early helps build your savings, read Joining early pays: Mario and Maria’s story.
Here’s another good reason to consider joining your company pension plan: you do not pay tax on money you or your employer contributes as long as the money stays in the plan. In fact, you can deduct contributions up to the yearly limits set by tax rules. In 2010, this limit is $22,000.
When you start work, your employer will give you information about your pension choices. You will also receive enrolment documents that you must complete and sign. Learn more now.
| Tip: It pays to name the person you want to get your pension savings in the event of your death. This person is called your beneficiary. To reduce the costs to your loved ones, your best choices include a spouse or common-law partner, a dependent child under age 18, a grandchild or, in some cases, a disabled adult child.Learn more now. |
Remember: When you start a new job, you will face many financial decisions.
If you’re not sure what choices are right for you, consider getting professional advice. For instance, you may be able to talk to someone at work. Or, if you have your own adviser, you may want to discuss some of your options with them. And if you’re concerned about how your pension and life insurance could affect your will – or, if you don’t have a will yet — consult a lawyer who specializes in estate planning. Learn more now.
Use this checklist that sums up the key steps you may need to take when you start a new job.