Secure pension plans are becoming an increasingly important workplace benefit that help to attract and retain workers, a new survey has concluded.
While many employees – especially younger workers – have historically tended to give little thought to the details of their pension arrangements, a new survey of 1,500 Canadian workers by pension consulting firm Towers Watson has found the plans have increasingly become valued by workers thanks to economic uncertainty and growing fears about inadequate retirement incomes.
The survey found 50 per cent of workers with a traditional defined benefit (DB) pension plan – which pays a guaranteed level of income in retirement – identified their pension plan as a key reason for joining their current employer.
Just 30 per cent of workers whose companies have a defined contribution (DC) plan or a group RRSP said the programs were a key factor in taking their jobs. Those plans, which are becoming far more prevalent in the private sector, do not pay a guaranteed level of income in retirement and instead vary depending on the performance of the investments chosen by the participant.
“As financial insecurity becomes more widespread, Canadian workers are increasingly interested in a secure rewards package with retirement benefits they can count on,” said Ian Markham, retirement innovation leader at Towers Watson.
The survey also found pension plans play a growing role in retaining existing workers. Depending on their ages, between 62 per cent and 71 per cent of Canadian DB plan members said their pension plan is a compelling reason to stay with their current employers, compared to 30 per cent to 50 per cent with DC pension plans.
Mr. Markham said the findings “reinforce” the fact that companies with DB pension plans “can achieve a more stable work force” than those with a DC plan, and suggests companies with traditional pensions should highlight the advantage to prospective employees.
The survey also found that one-third of Canadian employees would be willing to sacrifice part of their pay in return for enhanced retirement security, and one in four would give up a bonus in exchange for additional retirement benefits.
Mr. Markham said the fact so many workers would trade pay for better retirement security is an indicator of the “significant unease” that employees have about their ability to save for retirement.