As state and local governments focus on pension and retiree healthcare reforms, public sector employees are focusing on "reform" of their personal retirement planning and saving.
Summary
Virtually all full-time state and local government employees are covered by some form of employment-based retirement plan, usually a traditional defined benefit pension. The role of defined contribution (DC) plans in the public sector, however, is increasing. These plans often provide a supplemental savings option, but in some cases they serve as the primary retirement plan or part of a hybrid arrangement. The expansion of DC plans is driven by the long-term fiscal challenges facing most states and localities, leading them to reform their retirement plans with changes in eligibility requirements, benefit levels and sometimes plan type.
Key Insights
- One-third of public sector employees have been with their current employer for less than 10 years, and one-third for 20 years or longer. Approximately two-thirds do not expect to leave their current employer anytime soon.
- Health insurance, retirement benefits, job security and salary are the most important job elements public sector employees would consider when switching employers.
- Two-thirds expect to receive retiree healthcare benefits when they retire; among these, one-quarter reported changes to their benefits over the past two years.
- Most public servants do not know how much they need to save for a comfortable retirement, nor have they planned and saved specifically for medical expenses in retirement.
- Forty-four percent are very confident that they will receive all of the retirement plan benefits they have earned and 44% are somewhat confident.
- Only 20% are very confident that they are saving and investing appropriately for retirement, with approximately 55% somewhat confident in their savings and investing.
