The percentage of America’s younger workers who say an employer-sponsored retirement program is important for either joining or staying with an employer has jumped sharply in the past two years, especially at employers that still offer a pension plan, according to a survey by global professional services company Towers Watson.
The Towers Watson Retirement Attitudes Survey found that among younger workers (younger than age 40) whose employer offers a defined benefit (DB) pension plan, the percentage who agreed their retirement program was an important factor in accepting their job more than doubled — from 28% in 2009 to 63% in 2011. That 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 ¾ 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 health care 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 joining 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.
“In good and bad economic times, building and keeping a talented workforce can often mean the difference between success and failure. Employers with open DB plans appear to have a leg up on their competitors in keeping employees,” said Laurie Bienstock, North America practice leader, Rewards at Towers Watson. “Understanding worker preferences toward their reward programs is critical for employers that are looking to attract and retain the critical skill employees needed to drive business success.”
About the Survey
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 nongovernment organizations with 1,000 or more employees.