Compensation preferences among Canadian workers reveal that a secure pension plan is an increasingly important component of an attractive pay package.
According to a survey by global professional services company Towers Watson (NYSE, NASDAQ: TW), one-third of Canadian employees would be willing to sacrifice a portion of their compensation in return for enhanced retirement security, while one in four would agree to forgo a bonus in exchange for additional retirement benefits.
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“As financial insecurity becomes more widespread, Canadian workers are increasingly interested in a secure rewards package with retirement benefits they can count on” says Ian Markham, retirement innovation leader for Towers Watson. “While Canadians have traditionally looked to employer-sponsored retirement plans as one part of their financial future, the fact that so many workers are willing to trade pay increases or bonuses for enhanced retirement security points to the significant unease that many employees hold towards financial planning for their retirement years.”
The survey found that 50% of respondents with a defined benefit (DB) plan identified their retirement program as a key reason for joining their current employer, compared to 30% of respondents with a defined contribution (DC) plan or group RRSP, where the payout is dependent on the investment fortunes of the plan member.
DB plans appear to play an even more significant role in retention. Depending on age, between 62% and 71% of Canadian DB plan participants cite their retirement program as a compelling reason to remain with their current employer, compared to between 30% and 50% of those with a DC plan. 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.
The survey also revealed that a change from a DB plan to a DC plan has a strong effect on employee commitment and loyalty. While 75% of respondents whose DB plan had been changed in the last three years, but remained DB, say that they would like to continue working for their employer until they retire, that number decreases to 53% for respondents whose employers have changed to a DC plan.
The 2011-2012 Towers Watson Retirement Attitudes Survey includes responses from 1,577 full-time Canadian employees at private-sector organizations with 1,000 or more employees.