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New Research Highlights Role of Pension Plans in Recruiting and Retaining Public Safety Professionals

New National Institute on Retirement Security Research examines the role of pension plans in sustaining a robust public safety workforce

Published on June 25, 2024

As state and local governments across the nation continue to struggle to fill 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 here.

“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.

Associate Writer