A secure pension plan is an increasingly important component of an attractive pay package, according to a survey of 1,577 full-time workers by global professional services company Towers Watson. One-third of Canadian employees would be willing to sacrifice a portion of their compensation in return for enhanced retirement security, while one-quarter would agree to forgo a bonus in exchange for additional retirement benefits.
"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 results clearly reflect concern among Canadian workers about whether they will outlive their retirement savings" said John McIntosh, plan design issue leader at Towers Watson.
"If this concern translates to widespread delays in retirement, Canadian employers will be faced with many challenges from the shifting workplace demographic. An older workforce could affect everything from health and productivity to succession planning and the expectations for training and development of the next generation required for future growth."
One-half of respondents with a defined benefit (DB) plan identified their retirement program as a key reason for joining their current employer, compared to 30 per cent of respondents with a defined contribution (DC) plan or group registered retirement savings plan (RRSP), where the payout is dependent on the investment fortunes of the plan member.
Depending on age, between 62 per cent and 71 per cent of DB plan participants cited their retirement program as a compelling reason to remain with their current employer, compared to between 30 per cent and 50 per cent of those with a DC plan, found the survey. Younger DB plan participants under 40 years of age were twice as likely to stay with their current employer, compared to those with a DC plan.
A change from a DB plan to a DC plan also has a strong effect on employee commitment and loyalty, said Towers Watson. While 75 per cent of respondents whose DB plan had been changed in the last three years, but remained DB, said they would like to continue working for their employer until they retire, that number decreases to 53 per cent for respondents whose employers have changed to a DC plan.
"Organizations sponsoring DB plans can achieve a more stable workforce than those offering a DC plan," said Markham. "Understanding worker preferences toward their reward programs creates an opportunity for employers to highlight the value of their retirement plans to current and prospective employees — a potential advantage for any business that places a priority on retaining talent and organizational experience."
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