Fifty-four percent of workers are satisfied with their company’s retirement program, and 61% say it is their primary retirement savings vehicle, Watson Wyatt found in a survey of 2,200 workers in February. Twenty-nine percent said that were it not for their retirement plan, they would not be saving for retirement.
“The economic crisis has made it clear that retirement is something workers cannot take for granted,” said Jamie Knopping, a senior retirement consultant at Watson Wyatt. “And with employees’ heightened attention to their future, employers have a golden opportunity to educate workers on the benefits of their retirement plans—whether it is the value of a guaranteed flow of retirement income from a defined benefit pension plan or the responsibility of saving and choosing investments in a 401(k).”
However, those who have a defined benefit plan are more satisfied than those with a 401(k) or other type of defined contribution plan. Sixty-two percent of DB recipients are happy with their retirement plan, but only 51% of DC participants are.
Fifty-two percent of workers covered by a DB plan said it was a key reason they joined and continue to work for their employer, compared with 33% of those covered by a DC plan.
That said, 61% of DB recipients under the age of 40 are worried future benefits will be reduced because of the financial crisis.
Forty-six percent said they would be willing to pay a higher amount out of their paycheck to ensure a guaranteed benefit in retirement.
Fifty percent of all respondents said they prefer the freedom DC plans give participants to make their own investment decisions, even if means higher risk, because there is an opportunity to earn higher returns than in a pension plan. Another fifty-three percent said they prefer a plan that they can take with them when they change jobs.
“In the current environment, employees are beginning to rethink the cost-benefit tradeoff for retirement,” said David Speier, senior retirement consultant at Watson Wyatt. “And for many, that means a greater emphasis on financial security and flexibility than ever before. But security and flexibility don’t always go hand in hand. By crafting plans that balance the two, companies can offer valuable benefits employees are looking for, such as portability and some reflection of market conditions that will encourage the orderly transition of their workforces.”