One way to entice employees to stay may be to offer them a pension instead of a hybrid retirement plan that is part pension and part 401(k), suggests a new report from the nonprofit National Institute on Retirement Security.

The report focused on public workers in one state, Rhode Island, and found that “​​shifting employees … from defined benefit pensions in 2012 to a hybrid retirement plan is causing demonstrable changes in public employee attrition” and that “the overall trend indicates increasing challenges in retaining experienced workers.”

A different recent survey by NIRS offers additional evidence of the appeal of a pension to workers: 77% of respondents said they favor pension plans over other means of retirement savings. This latter survey, conducted in October 2023 by Greenwald Research and released in February, included responses from 1,208 people aged 25 and older.

In that survey, NIRS found that 401(k) and individual retirement accounts aren’t cutting it in terms of relieving anxiety over workers’ financial security in retirement. At the same time, however, fewer companies are offering pension plans than in decades past.

NIRS previously reported that pension spending boosted the US economy during the pandemic, as it accounted for $1.3 trillion in total economic output and supported almost 6.8 million jobs in the United States in 2020.

The majority of respondents to the survey released in February said that “the disappearance of pensions makes it harder to achieve the American Dream.” Eighty-three percent said that having such a plan would help them “be independent and self-reliant in retirement.”

The appeal to workers, according to the report’s authors Dan Doolan and Kelly Kenneally, is that pensions provide a steady stream of monthly income for life. Depending on a retiree’s lifespan, however, offering a pension can be somewhat of a gamble for an employer.

“Over the years, private companies gradually shifted from pensions to 401(k)s, which are generally cheaper and entail far fewer risks for the company. Indeed, the 401(k) transfers most of the risk to the worker,” USA Today reported. 

Nevertheless, pension plans seem to be making a comeback. 

IBM, for example, re-opened its employee pension plan late last year, with tremendous success. The move “is expected to result in substantial cash savings for IBM” and may become a tool for recruiting and retaining workers , according to NIRS.