Webinar on July
11th to Review Research
WASHINGTON, June 25,
2024 /PRNewswire/ -- As state and local governments
across the nation continue to struggle filling public safety
positions, new research from the National Institute on Retirement
Security (NIRS) explores how defined benefit pension plans are a
critical workforce management tool for public safety employers.
The Role of Defined Benefit Pensions in Recruiting and
Retaining Public Safety Professionals examines data from a
nationally representative sample of 28 police and fire pension
plans, as well as national datasets. The analysis finds that a
majority of these pension plans expect 75 percent or more of
current employees to retire from the plan, and more than half of
new hires (52 percent) are projected to stay until retirement. The
analysis also finds that police officers have an average tenure of
18 years, firefighters have an average of 20 years, and all public
safety workers combined have an average of 17.6 years of service.
This retention rate contrasts sharply with the private sector where
the median tenure in 2022 was 4.1 years.
The research finds that after the fifth year of service, public
safety employee turnover flattens and is incredibly low until a
public safety worker reaches retirement eligibility. This data
indicates that pension plans are working as intended by retaining
workers during their career and helping employees transition to
retirement when appropriate.
Read the research.
Register for a webinar on, Thursday, July
11, 2024, at 2:00 PM ET for a
review of the research with the report authors.
"It's widely known that pension plans are an effective tool for
employee recruitment and retention, especially among employers
seeking a career model for its workforce," said Tyler Bond, NIRS research director and report
co-author. "This new research is important because it details
precisely how pensions are magnets for public safety employees who
fill critical roles that are increasingly difficult for state and
local governments to staff. "
"The research also considers the negative public safety
workforce implications when employers move away from pensions. For
example, Alaska closed both of its
statewide public pension plans in 2006 and is realizing the
unfortunate workforce consequences. Municipalities throughout
Alaska now struggle to recruit and
retain firefighters and police officers and, in some jurisdictions,
the issue has reached crisis levels. The City of Fairbanks does not have police
officers on duty between 8 am and 12
pm due to severe staff shortages, and the Alaska Department
of Public Safety specifically cited the lack of a pension plan as
an impediment to success," Bond explained.
The research also finds:
- States and localities that have made significant changes to
public employee pension plans in recent years have seen a marked
increase in employee turnover.
- Sponsorship of public safety pension plans varies. Some states
almost exclusively provide plan coverage at the state level, while
others almost exclusively provide coverage at the local level.
Other states have a mix of sponsorship at the state and local
levels, with the difference sometimes being between police and fire
pension plans.
- Public safety pension plans are largely similar to all state
and local government pension plans in terms of funded status,
demographic ratio, and assumed rate of return on investments. The
main differences lie in benefit provisions relating to retirement
eligibility.
- Many firefighters and police officers do not participate in
Social Security through their public safety job, and the majority
of non-covered public safety professionals are concentrated in
several states.
Firefighters and police officers were among the first groups of
public employees offered pension plans, with the first public
pension plan in the U.S. established in 1857 for New York City police officers. Today, nearly
all public safety employees are provided a pension plan. Public
safety employees contribute to their pensions throughout their
tenure and are provided a stable retirement benefit after a public
service career. Pension plans are viewed highly favorably among
public safety employees, with most indicating that a pension was a
reason they chose a public service job and a pension is a major
reason they stayed at their job.
The report is authored by Paul
Baugher, Foster & Foster retirement consultant;
Alisa Bennett, Cavanaugh Macdonald president and consulting
actuary; Tyler Bond, NIRS research
director; Dan Doonan, NIRS executive
director; Larry Langer, Cavanaugh Macdonald principal and consulting
actuary; Joe Newton, Gabriel,
Roeder, Smith and Company pension market leader; Daniel Siblik, The Segal Group vice president
and actuary; and Matthew Strom, The
Segal Group senior vice president and actuary.
This research examines data from a nationally representative
sample of 28 police and fire pension plans, as well as national
datasets. It considers a number of aspects of pension plans that
are significant for public safety professionals, including Social
Security coverage and whether or not a Deferred Retirement Option
Plan (DROP) is available.
The National Institute on Retirement Security is a
non-profit, non-partisan organization established to contribute to
informed policymaking by fostering a deep understanding of the
value of retirement security to employees, employers, and the
economy as a whole. Located in Washington, D.C., NIRS membership includes
financial services firms, employee benefit plans, trade
associations, and other retirement service providers. More
information is available at www.nirsonline.org.
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SOURCE National Institute on Retirement Security