Decumulation tools, like VPLAs and VPBs offer a more sustainable, member-centric approach to post-retirement income. 

In Canada’s evolving pension landscape, defined contribution (DC) plans have long focused on the accumulation phase—helping members build their retirement savings. But with more Canadians entering retirement without the guarantees of defined benefit (DB) plans, the spotlight is shifting to a more pressing and complex question: how can members turn their savings into sustainable income that lasts? 

At the heart of this question lies a growing challenge—longevity risk. As life expectancies rise, retirees face the very real prospect of outliving their savings. This risk is compounded by market volatility, inflation, and the need for sound f inancial decisions. Add in the uncertainty around sustainable withdrawal rates, and the result is a troubling equation that can erode retirement security and confidence. 

Yet despite this, traditional life annuities have seen low uptake. Many retirees perceive them as inflexible, expensive, and poorly suited to their needs— especially when it comes to inflation protection, liquidity, or estate planning. For plan sponsors and administrators, this presents a dilemma: how to offer solutions that provide income for life, while preserving member choice and autonomy. 

A new generation of decumulation tools is emerging to bridge this gap. Variable Payment Life Annuities (VPLAs), a newer option, are gaining traction— especially when used in combination with Variable Payment Benefits (VPBs). This hybrid approach offers flexibility and lifetime income without relying on insurance companies. 

VPLAs allow members to pool their longevity risk within the plan, offering income that adjusts based on investment returns and the mortality experience of the group. The goal is to provide inflation-sensitive, sustainable income for life. VPLAs share some similarities with traditional annuities, such as providing lifetime income, but with important distinctions. Payments are adjusted annually, which helps members maintain purchasing power over time, and they typically involve lower administration costs for plan sponsors.  

VPBs, on the other hand, allow members to draw income directly from their DC plan while maintaining investment control. Much like a prescribed RRIF, a VPB offers flexibility in withdrawal amounts, continued tax-deferred growth, and the option to leave assets to an estate. 

Together, these options offer a powerful value proposition: a VPLA can provide the security of lifetime income, while a VPB offers the adaptability to respond to personal needs, market changes, or unexpected expenses. Members can choose how much of their retirement income they want to be predictable versus f lexible, based on their individual goals. 

In Saskatchewan the Public Employees Pension Plan (PEPP), administered by Plannera Pensions & Benefits, has been among the first in Canada to operationalize this approach. PEPP now offers both a VPB and a Lifetime Pension (VPLA), giving members the ability to build a personalized retirement income strategy—within the plan they already know and trust. PEPP’s Lifetime Pension is one of the first in-plan VPLAs available in Canada, and its design aligns closely with the goals of long-term sustainability, equity among members, and inflation-sensitive income. By keeping the option within the plan, members benefit from continued low fees and access to familiar investment structures—without transferring their assets to an external insurer. The Lifetime Pension is governed with a clear framework for how payments adjust annually, helping members set realistic expectations. 

For plan sponsors and administrators, this shift in focus has real implications. Helping members navigate the transition from saving to spending requires more than just offering new retirement income options – it calls for a reimagining of the entire retirement journey. Education, support, and simplified choices are key. The goal is not to overwhelm members with too many options, but to provide clear, coordinated pathways that reflect their personal circumstances and financial realities.  

Retaining assets within the plan is another important consideration. With meaningful, well-communicated income options, sponsors can strengthen member engagement and preserve scale, even post-retirement. And with federal and provincial regulations evolving to support in-plan decumulation, being proactive now positions plans to lead, not follow. 

The transformation of DC plans into retirement income providers marks a significant turning point in Canadian pension strategy. By offering integrated options like VPLAs and VPBs, sponsors can provide lasting value—empowering members to face the future with confidence, eliminating longevity risk, and supporting them through every phase of their retirement journey. 

Tricia Brown, Director, Governance and Executive Secretary, Plannera

Tricia joined Plannera (formerly PEBA) in 2019 and is Director of Governance and Executive Secretary. 

Prior to joining the organization, Tricia worked as a consultant and analyst for the Government of Saskatchewan and as a manager for the Canadian Transportation Agency. 

Tricia oversees policy, research and governance services for Plannera and more than 30 pension and benefit plan boards and commissions. This includes analysis and recommendations related to policy and legislative changes and best practices. 

Tricia has a graduate degree in Economics and an undergraduate degree in Arts from the University of Regina