In 2011, younger workers increasingly said they accepted a
job offer from a company because it offered a defined benefit (DB) pension
plan.
According to the Retirement Attitudes Survey by Towers
Watson, in 2009 28% of workers younger than age 40 said a defined benefit plan
was the reason for accepting their job. This number more than doubled in 2011,
to 63%. This compares with a nine percentage point gain (19% to 28%) for
younger employees at organizations that offer only a defined contribution (DC)
plan.
Defined benefit retirement plans have also become strong
retention tools among this demographic. Nearly three-fourths (72%) of younger
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 defined
contribution plan.
David Speier, a senior retirement consultant at Towers
Watson, credits two contributing factors. “The combination of a slow economic
recovery and [a greater number of] older employees delaying retirement is
making it increasingly difficult for younger employees to find jobs or advance
in their careers. “Young workers are clearly giving much more weight toward
both employer retirement and health care benefits when making career and
employment decisions.”
The survey found that the number of defined benefit 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 defined benefit 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 than
those hired before 2007 (67% versus 18%). Meanwhile, defined contribution plans
have only slightly improved as attraction tools. At companies just offering
just that type of plan, only 19% of those hired during the same time span said
the retirement program influenced their employer choice.
The Towers Watson survey was conducted last June and July
and includes responses from 9,218 full-time U.S. employees at nongovernment
organizations with 1,000 or more employees.
Tara Cantore