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CCH® PENSION — 10/12/09

Despite economy, most employees satisfied with retirement benefits, Wyatt finds

Despite the weak economy, a majority of workers are satisfied with their current employer-sponsored retirement benefits, according to a survey by Watson Wyatt. The Watson Wyatt survey was conducted in February 2009 and includes responses from more than 2,200 full-time workers.

The survey found that 54% of employees are satisfied with their company's retirement program. In addition, the vast majority of surveyed employees (61%) view their company's retirement program as the primary vehicle to save for retirement, and nearly one-third (29%) would not save for retirement without it.

"The economic crisis has made it clear that retirement is something workers cannot take for granted," said Jamie Knopping, senior retirement consultant at Watson Wyatt. He added that "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)."

DB participants more satisfied

More employees with defined benefit (DB) plans (62%) are satisfied with their retirement program compared with those with only defined contribution (DC) plans (51%), the survey found. Nearly half (46%) of employees said they would be willing to pay a higher amount out of their paycheck to ensure a guaranteed benefit in retirement.

However, features generally associated with DC plans are also attractive to employees —for instance, half (50%) prefer to have the freedom to make their own investment decisions and are willing to accept the associated investment risks for an opportunity to earn higher returns. A little over half of the surveyed workers (53%) also prefer a plan that participants can take with them when they change jobs.

The Watson Wyatt survey also found that:

• Two in five workers said they would be willing to pay a higher amount out of their paycheck to ensure access to health care benefits if they retire before they are eligible for Medicare.
• Sixty-one percent of workers under age 40 are concerned about their future DB plan benefits being reduced, and 42% are concerned that their future benefits will be eliminated as a result of the financial crisis.
• More than half (52%) of workers covered by a DB plan said their company's retirement program is a key reason they continue to work for their employer compared with one-third (33%) of those with only a DC plan. Workers with a DB plan are also more likely to want to stay with their employer until retirement (67%, as opposed to 54% of those with only a DC plan).

Source: Watson Wyatt press release, September 1, 2009.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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