Young and mid-career workers are paying more attention to retirement benefits when making career decisions. A recent Towers Watson survey found that people under 40 are increasingly going to work for and staying with employers that provide better retirement benefits.
The proportion of workers under age 40 who consider the retirement program an important factor in accepting their job more than doubled from 28 percent in 2009 to 63 percent in 2011, the survey of 9,218 employees at private sector businesses with 1,000 or more employees found. “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.”
The study found that traditional pensions are becoming an increasingly effective way to attract and keep young workers. Some 72 percent of employees at companies sponsoring traditional pension plans say the retirement program gives them an important reason to stay on the job, up significantly from 37 percent in 2009. The majority of workers with a traditional pension (74 percent) say they hope to work for their current employer until retirement, up from 44 percent in 2009.
Far fewer young people with 401(k) accounts say the company retirement plan influenced them to join (28 percent) or stay with (36 percent) their firm. And less than half (47 percent) of employees only offered a 401(k) plan would like to stay at their current job until retirement. “Employers with open defined-benefit plans appear to have a leg up on their competitors in keeping employees,” said Laurie Bienstock, a North America practice leader at Towers Watson.
Workers who have recently had their retirement benefits reduced are the least likely to want to continue to work for their current employer. Employees at companies that recently reduced or eliminated their 401(k) match (58 percent) are less likely to want to stay until retirement than workers whose matching contributions were not interrupted (66 percent). And individuals who had their traditional pension plan frozen or their retiree medical benefits eliminated are the least likely to want to maintain their current job until retirement. Only a third of employees at companies that have ended the traditional pension or retiree medical plan in the past three years are planning to stick around for the benefits.