Are you among the lucky Canadians who receive benefits? You may be interested to know that the five most common employee benefits include health and dental insurance, group life insurance, training expenses, vehicle allowances, and gifts and awards, according to the Canadian Payroll Association.
But do you know just how much those perks are worth? (Combined can easily be worth about 20 per cent of your total compensation package.) Without insight into the value of those benefits, how can you make knowledgeable choices about who you work for and what they’re offering?
Check What’s Available Before You Need It
Most Canadian workers have only a passing understanding of their workplace benefits– until they need to make a claim, of course.
Then, they’re either grateful for the protection the plan provides, or disappointed to find that their expenses aren’t covered. The trick, however, is to know where you stand beforehand – particularly if you’re contemplating a job search.
Although they vary sharply across companies, employee benefits are designed to add value to your overall compensation package. Typically, they include things like vacation time, sick days, employee assistance programmes, health and drug plans, disability benefits, life insurance, and retirement plans.
If you’re fortunate, they might also include items like childcare, employee discounts, education assistance, legal assistance, gym memberships, etc.
Also read: How to Save Money On Your Work Plan Benefits>
Putting A Value On Intangibles
Many people find it difficult to place a value on such programs, preferring instead to focus on salary since it’s immediate and tangible. But a higher salary doesn’t always mean more when it comes to total compensation, particularly if you have a family to consider.
Younger workers are more likely to believe that they’ll always enjoy good health, and that Medicare will pay for everything else anyway. As a result, they tend to undervalue health coverage, for instance. After all, you can’t eat benefits and who says you’ll even need glasses down the road?
The best way to put a dollar value on benefits is to ask your company or group benefits provider to do it for you. The University of Toronto, for instance, provides a detailed annual breakdown to its employees. But, unless you work for a big company, that’s not always available.
At the very least, visit your plan website to obtain company-specific information and options. And ask friends, family – and particularly coworkers – how they’ve utilized their benefits and what they’ve learned along the way.
Time for Some Benchmarking
If you’re reviewing a job offer, or thinking about self employment, try to compare the overall compensation package with some sort of benchmark to see where you stand. One way to estimate the dollar value of your compensation package is by multiplying your salary or hourly wage by the number of hours you typically work.
Also read: Benefits Options for the Self Employed>
Most employers offer a mixture of vacation, holidays, and sick leave to salaried employees. Assuming you get 10 days for vacation, five sick days, and 10 civic holidays, you’re might be entitled to as many as 25 paid days off per year. If you receive five days a year in paid sick leave at a job paying you $25 an hour, for example, that’s worth roughly $940, assuming a 7.5 hour day.
Always Look To The Future
When it comes to retirement, try and value your pension plan – again, assuming you have one. It will likely take the form of a company match on your RRSP contributions or employer contributions to a defined contribution or defined benefit plan. Since the latter are becoming increasingly rare, let’s look at your employer’s matching RRSP contribution first.
Want to get started with RRSPs? Our 4-step guide has you covered>
If the offer is a 50 per cent match on the first 5 per cent that you contribute to your RRSP, for instance, then they’ll effectively be contributing 2.5 per cent of your salary to your plan. So, for someone making $50,000 a year, that’s a $1,250 boost.
Valuing a guaranteed pension plan is much more complex but here’s one thing to consider: Your employer contributes more money to your pension the longer you work for the company. At the same time, an indexed pension will be worth more than one that is not designed to match inflation.