Workers who participate in defined benefit pension plans are more concerned about their retirement than those who are in defined contribution plans, according to research by Towers Watson.
Cutbacks to existing plans increase workers’ concerns about retirement security. According to the 2013/2014 Global Benefit Attitudes Survey, 75 percent of DB plan participants whose plans have been frozen are concerned about achieving a financially secure retirement.
Most defined contribution plan participants expect these plans to be their primary source of retirement income. The only group that bucks that trend is older participants who only have a defined contribution dplan. They expect to rely more on Social Security when they retire.
Seventy-eight percent of workers over the age of 50 are concerned about their retirement security, compared with 39 percent of employees under 40, it stated.
More than half of employees responding to the survey said that retirement security has become more important to them in the past few years.
Towers Watson also found that satisfaction with retirement plans rose steadily from 2009 to 2013, but worker satisfaction with their health plans has dropped significantly since 2007.
The demand for generous and secure retirement benefits is rising. Sixty-two percent of employees surveyed said they are willing to give up some pay for a guaranteed retirement benefit and more than half would sacrifice pay for a more generous benefit.
Fewer employees are willing to pay more for health care benefits after they retire but before they become eligible for Medicare. Younger and lower-income employees are the least willing to exchange current pay for postretirement, pre-Medicare health benefits.
When asked to rank various forms of compensation, workers overwhelmingly chose bigger paychecks, followed by generous retirement and health care benefits. Younger workers are more attracted to big bonuses and additional paid time off than health care benefits, the survey found.