Younger generations often adopt the traits and characteristics of their elders — for the pension industry, this translates into a long-standing focus on what attributes defined contribution pension plans can assume from defined benefit plans.

But as DC plans grow older and wiser, is it time for a reversal? With younger generations facing different financial priorities and challenges compared to their parents and grandparents, what can the current generation of pension plans teach the seniors of the pension world?

While a DB plan is strictly for retirement purposes, one of the main advantages of a DC plan is flexibility because it can be used for different financial needs, says Robert Marchessault, director of pension and benefits at Bell Canada.

Read: What can DC pension committees learn from DB plan governance?

The organization recognizes that employees may not be ready to think about retirement savings when they’re young, he says, so it allows plan members to contribute to their group registered retirement savings plan, tax-free savings account and first home savings account, with an employer match in the DC plan.

For example, when employees contribute to the group TFSA, Bell Canada matches 100 per cent, up to two per cent of salary, into the DC plan. “By contributing to the TFSA, they can use it to repay a student loan or other debt they may have. We want to reward plan members and you can’t really do that in a DB plan.”

Mercer Canada has seen a long-term trend of employers exploring DC plan design changes that incorporate more flexibility to meet employees where they’re at in their savings journeys, says Bernadette Chik, the consultancy’s DC leader. A recent survey conducted by Mercer Canada found most workers younger than age 45 cited covering monthly expenses as their top financial priority and retirement wasn’t really on their radar.

“I think this makes a strong case for a flexible plan design. The main goal is to allow workers the flexibility to direct their contributions to a vehicle that makes sense for them. Doing this allows them to access a portion of their savings if they need to in the shorter term, as many Canadians do.”

Read: Editorial: Employers embracing innovation, flexibility in DC plan design

Plan sponsors that convert their DC plans to a more flexible design will typically see greater engagement, adds Chik, with plan members contributing more and truly valuing the plan.

Another advantageous attribute of a DC plan is that it’s easier to move from one workplace to another, says Marchessault. “A DB plan is good if you start your career at one place and end it at the same place, which isn’t the reality now with many young workers. People could have four or five jobs [throughout] their career.”

Indeed, the money in a DC plan belongs to the member and no one can touch it, adds Chik. “They can take their savings with them when they change jobs, [which matters........

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