How Pension Accrual Affects Job Satisfaction

Using a sample of 429 employees in a large, unionized public utility company in Canada, we examine the incentive effects of a final-earnings pension plan on employees' job satisfaction. Contrary to rational economic expectations, job satisfaction is found negatively related to expected accruals under the pension plan. Satisfaction was also lower among those who perceived a higher likelihood of being declared redundant, had better nonmarket alternatives, and who viewed conflictual approaches as most effective in resolving prior disputes at work. Conversely, employees who perceived greater support for employer-sponsored training, perceived such training to be effective, and believed cooperative approaches to dispute resolution worked best, were more satisfied. Implications for pension theory, research, and policy are discussed.