According to the Retirement Attitudes Survey by Towers Watson, in 2009, 28% of workers younger than age 40 said a DB plan was their reason for accepting their job. This number more than doubled in 2011 to 63%. This number compares with a nine-percentage-point gain (19% to 28%) for younger employees at organizations that offer only a defined contribution (DC) plan.
Retirement plans have also become stronger retention tools among younger employees with a DB plan. Nearly three-fourths (72%) of these employees cite their retirement plan as a strong incentive to stay with their employer – nearly double the percentage (37%) in 2009, and twice the retention value reported by younger workers whose employers offer only a DC plan.
“Two factors are likely causing this change: The combination of a slow economic recovery and more older employees delaying retirement is making it increasingly difficult for younger employees to find jobs or advance in their careers,” said David Speier, a senior retirement consultant at Towers Watson. “As a result, young workers are clearly giving much more weight toward both employer retirement and healthcare benefits when making career and employment decisions.”
DB Programs Gain Importance With New Hires
The survey found that the number of DB plan participants hired within the last two years who said the retirement program was an important factor in deciding to join their employer jumped from 27% in 2009 to 70% in 2011. At employers with DB plans, employees hired within the past two to five years were more than 3.5 times as likely to say their retirement program strongly affected their employer choice decision (67% versus 18%). Meanwhile, retirement programs have become only slightly better attraction tools at companies with only a DC plan. Of this group, 19% of employees hired over the same time span reported that the retirement program was an important reason for their employer choice.
Many more workers who accept a job that offers a DB plan intend on a long career with their employer. More than three-fourths (77%) of new hires at companies with a DB plan say the retirement plan gives them an important reason to stay on the job, and 85% hope to work for their employer until retirement.
The Towers Watson Retirement Attitudes Survey was conducted in June and July 2011, and includes responses from 9,218 full-time U.S. employees at non-government organizations with 1,000 or more employees.
For more information, visit http://www.towerswatson.com/newsletters/insider/6530.
« SECOND OPINIONS: Employer Mandate, Waiting Period, and Auto-Enrollment Issues – Part II