The survey of more than 3,000 employees, conducted in May and June of 2010, found that 60% of new employees (those with less than two years of service) at employers with DB plans cited the retirement program as an important reason they chose to work for their current employer, a sharp increase from just 27% in 2009. And nearly three-fourths (72%) of new employees said the retirement program is an important reason they will stay with their employer, up from 51% in 2009.
Conversely, just 20% of new employees with only a defined contribution (DC) plan in the retirement program said it played a role in their decision to work for their employer, up from 16% in 2009, according to a press release. Meanwhile, one-fourth (26%) said the retirement program was an important reason to remain with their current employer, unchanged from 2009.
Even younger workers are increasingly realizing the value of a defined benefit plan. The percentage of younger workers (less than 40 years old) who cited their DB plans as an important reason to work for their current employer jumped by more than half, from 28% in 2009 to 43% this year, the survey found. On the other hand, the corresponding figures for those with a DC-only plan declined slightly – from 19% last year to 17% in 2010.
The survey also found that two-thirds of employees (67%) would like to continue working for their current employer until they retire, an increase from 56% in 2009. However, DB plans are much more likely than DC plans to be an important factor in the retention of employees. Four of five workers (80%) at organizations with DB plans said they plan to continue working for their employer until they retire, compared with only 62% at companies with DC plans.
Younger employees at organizations with DB plans are also much more interested in remaining with their employer until retirement – increasing from 44% in 2009 to 70% this year.
“Until the economy shows real signs of recovery, employees will remain hesitant about leaving secure jobs that also come with secure benefits,” said Kevin Wagner, a senior retirement consultant at Towers Watson, in the press release. “The heightened employee desire for retirement security might lead some companies to rethink their DC-only plan strategies.”