Nearly 40% of members of final salary pension schemes would be reluctant to move to a new job for fear of damaging their retirement savings, research* from pensions risk transfer provider MetLife Assurance Limited shows.
The concern about the adverse impact of changing jobs on final salary schemes is shared more generally by all employees. More than six out of 10 workers would be deterred from moving jobs to an employer offering inferior pension benefits. Around 26% would not move jobs, while 36% would only move if their salary increased by 10% or more.
MetLife Assurance’s research shows widespread awareness of the importance of pensions with employees thinking carefully about the impact of job moves on retirement saving – but also revealed pessimism about the likelihood of being able to retire when desired, with 61% of employees expecting to have to work past 65 even though just 35% expressed a desire to do so.
Emma Watkins (pictured), Director of Business Development at MetLife Assurance Limited says: “It is very encouraging to learn the level of importance people are placing on their pension savings as demonstrated by the reluctance to move jobs if the pension provision at their new employer is inferior. That gives a clear message to employers of the importance and quality of pensions in recruitment and retention of staff.”
Pension scheme funding has become a key focus in the public sector with Government reforms proposing higher employee contributions, longer working lives and the introduction of career average rather than final salary schemes. In the private sector just 18% of defined benefit and hybrid schemes with around 2.4 million members are open to new joiners.
MetLife Assurance’s research showed many employees are now expecting to work longer due to recent stock market volatility with 27% of 55 to 64-year-olds in the survey saying they had postponed plans for retirement due to falls in their pension savings during the past three years.
Watkins says: “The trend of decline in final salary schemes is well-established and is unlikely to be reversed. Employers have faced the risk that asset returns and longevity increases can dramatically increase the cost of pension provision and many are now considering strategies to help them secure their pension liabilities with certainty. As these risks shift to employees under defined contribution plans, we expect that individuals will also face the need for increased contributions and products which protect retirement outcomes. It’s not surprising that many employees would want a material rise to switch jobs – the extra income will be needed for private savings to maintain their retirement hopes."