Younger Workers Look for Employers with DB Plans

There are plan designs available for successful small business owners and professional service firms to add a hybrid defined benefit plan and attract and retain talented employees. These plan designs have become a viable solution by provisions in the Pension Protection Act of 2006. This plan design does not work for all companies however when it does work it is very attractive.

President George W. Bush signs into law H.R. 4...
President George W. Bush signs into law H.R. 4, the Pension Protection Act of 2006, Thursday, Aug. 17, 2006. Joining him onstage in the Eisenhower Executive Office Building are, from left: Secretary of Labor Elaine Chao; Rep. Buck McKeon of California; Rep. John Boehner of Ohio; Senator Blanche Lincoln, D-Ark.; Senator Michael Enzi, R-Wyo., and Rep. Bill Thomas of California. (Photo credit: Wikipedia)

The survey found that the number of DB plan participants hired within the last two years who said the retirement program was an important factor in deciding to join their employer jumped from 27% in 2009 to 70% in 2011. At employers with DB plans, employees hired within the past two to five years were more than 3.5 times as likely to say their retirement program strongly affected their employer choice decision (67% versus 18%). Meanwhile, retirement programs have become only slightly better attraction tools at companies with only a DC plan. Of this group, 19% of employees hired over the same time span reported that the retirement program was an important reason for their employer choice.Many more workers who accept a job that offers a DB plan intend on a long career with their employer. More than three-fourths (77%) of new hires at companies with a DB plan say the retirement plan gives them an important reason to stay on the job, and 85% hope to work for their employer until retirement.

For companies to remain competitive for younger, talented employees they must listen to what these prospective employees are looking for. There are plan designs available to accommodate a defined benefit plan for smaller employers.

Please comment or call to discuss what options are available for your company.

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