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 employerB次元官网网址檚 human resources department provided her with a package that offered her the choice of taking the commuted value of her pension B次元官网网址� a lump sum based on a calculation of what the future pension is worth now B次元官网网址� or keeping the money in her pension plan until 2047, when she would start receiving monthly payments.

B次元官网网址淚 was shocked at how much money I had,B次元官网网址� Lehman said. B次元官网网址淚 had never had this amount of money in my bank account before.B次元官网网址�

For millennials who havenB次元官网网址檛 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 LehmanB次元官网网址檚 case, she felt having autonomy over how to invest her money was more attractive than leaving it with her former employer.

B次元官网网址淚 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,B次元官网网址� she said.

B次元官网网址淚 also wanted to make ethical decisions about where my money sits.B次元官网网址�

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.

Each employee will get their own set of choices when they leave a job, and those choices will differ even further depending on whether they have a defined benefit pension plan or a defined contribution plan, said Liz Schieck, certified financial planner at the New School of Finance in Toronto.

Deciding what exactly to do with a pension can be overwhelming, Schieck added, which is why she recommends clients take some time to think it through and seek the advice of an unbiased financial planner if possible.

When it comes to defined benefit pension plans, Schieck sees clients most commonly decide between leaving the pension with their employer, transferring it to their new employerB次元官网网址檚 pension plan or taking the pension and investing it elsewhere.

In this situation, it comes down to confidence and comfort levels. B次元官网网址淪ome individuals might feel more averse to investing it in the market themselves, while others might feel less confidence in a pension,B次元官网网址� Schieck said

In the latter case, those in their 20s and 30s might not feel confident that a company is going to continue to exist when they retire and throughout that retirement.

For those that decide to take the pension with them, putting that money into a LIRA, and any remaining money into an RRSP if you have available room, means that it wonB次元官网网址檛 count as taxable income. However, if you donB次元官网网址檛 put remaining funds, outside of a LIRA, in an RRSP, youB次元官网网址檒l get a check and that money will be taxed, Schieck said.

If someone is weighed down by student debt, that money can make a big difference in helping to pay it off.

But the decision of whether to put it in an RRSP or take the tax hit is not one-size-fits all, Schieck said.

B次元官网网址淚t depends on what tax rate youB次元官网网址檙e going to pay, what tax bracket youB次元官网网址檙e in, what debt you have, whatB次元官网网址檚 the interest rate on, and what other savings capacity you will have going forward. This is why itB次元官网网址檚 great to get advice.B次元官网网址�

When it comes to a defined contribution plan, the decision can sometimes be simpler because there are less choices. The defined contribution plan already acts as an investment account, Schieck said. ThereB次元官网网址檚 a set amount of money that you can either keep in the plan or invest in a locked-in account elsewhere. ThereB次元官网网址檚 also an option to buy an annuity, but theyB次元官网网址檙e a much less popular route.

When quitting a job with a defined contribution plan, the decision about whether to take the pension with you is dependent upon what products you want to invest in and where, Shieck said.

For example, those that take the pension with them might feel more comfortable keeping their investments at their own bank, or want to be more selective about their investments, like Lehman, who wanted to ensure her investments are ethical.

B次元官网网址擫eah Golob, The Canadian Press