‘No one-size-fits-all’ choice for work pension as millennials make future plans: expert

For millennials who haven't yet had a chance to invest outside of mandatory employee pension contributions, figuring out what to do with a pension plan can be daunting.

In the fall of 2021, 39-year-old Krista Lehman quit her job as a program assistant at a Vancouver post-secondary institution to take a mental health break and pursue other career options.

When it came to her defined benefit pension plan, her employer’s human resources department provided her with a package that offered her the choice of taking the commuted value of her pension – a lump sum based on a calculation of what the future pension is worth now – or keeping the money in her pension plan until 2047, when she would start receiving monthly payments.

“I was shocked at how much money I had,” Lehman said. “I had never had this amount of money in my bank account before.”

For millennials who haven’t yet had a chance to invest outside of mandatory employee pension contributions, figuring out what to do with a pension plan after leaving a job can be daunting.

In Lehman’s case, she felt having autonomy over how to invest her money was more attractive than leaving it with her former employer.

“I wanted to more of an active participant in my savings and in my retirement planning than I had in the past, so this felt like an opportunity to do that,” she said.

“I also wanted to make ethical decisions about where my money sits.”

Lehman took the full commuted value, putting nearly 50 per cent in a Locked-In Retirement Account (LIRA), approximately 33 per cent in a Registered Retirement Savings Account, and cashed out the other 17 per cent to handle current expenses, like a new computer.