In recent years there has been a growing sense in the public sector that defined benefit (DB) plans, which guarantee an annual yearly payout for employees, post-retirement, are no longer the important piece of the HR puzzle that they used to be. The logic behind this is that new employees often don’t intend to stick around long enough to vest in a plan and as a result the defined pension benefit – rare in the private sector – doesn’t provide a competitive advantage that justifies its cost.

But a new study, from the National Institute On Retirement Security shows that for police officers and firefighters in particular, DB plans continue to make a dramatic difference for employers. 

In fact, once public safety employees have gotten vested in their pension plans, the turnover rates drop dramatically. As the report states, “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.”

With this in mind, it’s not a surprise to find that, according to the report, “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.”

Despite these findings, some cities and states have elected to drop their defined benefit plans in favor of defined contribution plans, in which employee and employer contributions are made to retirement accounts yearly, but with far less certainty attached to post-work income. 

While this may save money over the long haul, the impact on retention has been dramatic.  For example, according to the NIRS, Alaska has switched to a defined contribution plan for peace officers, and “research found far lower levels of retention among both male and female peace officers in the DC plans. The DB plan would be expected to keep 63 out of 100 male peace officers after 25 years of service, whereas the DC plan is only expected to retain 17 out of 100.”

Similarly, the report points to Rhode Island.  Which changed its DB plan to a DB-DC hybrid plan in 2012. “In the years since,” the report states “turnover has increased noticeably among police officers and firefighters.”

Retention of police and firefighters has become particularly critical at a time when multiple cities are plagued with shortages of public safety employees who have become increasingly difficult to recruit. 

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