the company we work for transitioned from defined contribution to a defined benefit scheme ~3.5 yrs ago, he was saying that this works out much better for a company as if you leave they have to pay you out less than they would if you had a defined contribution pension
he was also saying it works out better for you if you stay until the bitter end (>30yrs in both our cases)
It is rarely true that a DB pension will cost the employer less.
In a DC pension, the employer contibutes a set percentage and that's it. If the stock market tanks, and the pension plan drops in value, the employer has no responsibility.
In a DB pension, the employer is responsible for putting in as much as it takes to make up the promised pension. This can cost a lot, as can be seen in the number of under funded pension schemes at the moment.
Your friend is commenting on what happens if you leave a company before
retirement.
If you leave a DB pension, you can leave your pension there, until retriement, so the company is still responsible.
If you transfer your pension, the transfer value would be dependent on your years of service, and the number of pension fund units that this would buy would again be dependent on the current value of equities so might
be a good value or a bad one.
So, as far as I can tell, the company does not gain by people leaving
DB pensions early.
Anyone else think this makes sense ?