TORONTO — Years of volatile stock markets and low interest rates have made Canadians feel vulnerable about their retirement and they’re looking to their pensions, a new report by Towers Watson suggests.
“Employees are willing to sacrifice cash pay, bonus opportunities and to a lesser extent paid time off to secure and increase their retirement benefits,” the report said.
“The increased appeal for security is also affecting the factors that employees look for in a job.”
Companies have been switching from defined benefit pension plans to defined contribution plans because of the risks inherent in promising to pay a regular monthly benefit years in the future.
However the report said defined benefit plans are attractive for companies that want to attract and keep employees.
The report said base pay and job security were top factors for taking a job among employees of all ages, but many are attracted to the security of their retirement.
“The appeal for security is particularly evident among employees with a defined benefit plan, which supports that these programs are an effective attraction and retention tool,” the report said.
The survey by the pension consulting firm found a third of Canadian workers would give up part of their current compensation in return for improved security in retirement. Towers Watson also said one in four would forgo a bonus in exchange for additional retirement benefits.
The report suggests that 50 per cent of those surveyed with a defined benefit pension plan identified their retirement program as a key reason for joining their current employer.
That compared with 30 per cent of those with a defined contribution plan or group RRSP.
And once employees have been hired, pension plans play an even larger role in why workers stay with a company.
Depending on age, between 62 per cent and 71 per cent of Canadian workers in a defined benefit plan cite their retirement program as a compelling reason to remain with their current employer.
That compared with between 30 per cent and 50 per cent of those with a defined contribution plan.
The report said younger workers — those under 40 — with a defined benefit plan were twice as likely to stay compared with those with a defined contribution plan.
Towers Watson surveyed 1,577 full-time workers for private sector companies with at least 1,000 employees.