As witnessed by the debate of economists and policymakers about better measures of community prosperity, and the shift in the financial markets towards environmental, social and governance drivers of value (ESG), it is increasingly incumbent upon organizations to understand their value beyond economics and finance and explore their role in generating social value.
Retirees who are members of a DB pension plan in the study are 34% more likely to report higher satisfaction with life than retired Albertans with no pension. They are also 15% more likely to report higher satisfaction with life than retired Albertans with a defined contribution (DC) pension. This difference persists across different regions of the province, income groups, and ages of retirees.
A key factor driving this difference is the additional financial security that a DB pension provides. Retirees who are members of the DB plans have an 18% greater likelihood of being more satisfied with their financial security than DC retirees and a 51% greater likelihood of being more satisfied than those with no pension.
For retired members, the financial equivalent to the increased satisfaction of life evaluated using the well-being valuation approach is $1.2 billion in 2021. This is equivalent to $12,800 per retiree on average, or when added to a retiree’s regular pension payments, a 56% increase in the value of their pension payments relative to no pension plan. Effectively, this is the value of the additional benefit that retirees receive due to the increased satisfaction with life as a result of their pension membership.