Workforce Turnover and Retention in the Public Sector: Insights from Public Pension Plans

Workforce Turnover and Retention in the Public Sector: Insights from Public Pension Plans

Public pensions help government employers retain experienced career workers, reducing costly turnover and supporting the reliable delivery of essential public services, according to research from the National Institute on Retirement Security.

Workforce Turnover and Retention in the Public Sector: Insights from Public Pension Plans finds that while employee departures are concentrated in the first five years of service, retention is strong among workers who remain beyond that point. Among public employees who reach five years of service, 53 percent are expected to remain through year 20 and 45 percent through year 30.

This report examines workforce turnover and retention in the public sector using insights from public pension plans. The analysis draws on turnover assumptions published in actuarial reports and other information collected from 136 state-administered public pension plans representing 203 plan-employee groups and 12.8 million active members.

The findings and methods can help plans better understand turnover and retention in their own workforces. They can also help employers and policymakers consider where turnover is higher than in peer systems and focus policies on the workers they are trying to retain.

Register for a webinar on Oct. 15 at 3 PM ET for a review of the findings.

Key Findings

Public workforce retention stabilizes after the five-year mark. The greatest employee losses occur during the first five years, with 48 percent of new hires expected to remain through year five. Among those who reach that milestone, retention becomes substantially more stable.

Retention varies by workforce and pension plan characteristics. Retention is generally higher for police/fire employees and teachers, employees in hybrid-only and defined benefit-only plans, and those not covered by Social Security. In contrast, retention differs relatively little by vesting period.

Average retention masks substantial variation across individual plans. Variation is greatest among pension plans covering police/fire employees and increases with years of service. In contrast, retention is less varied in plans covering teachers, state employees, and local employees, with little change over time. Among plans covering general employees, variation is similar to that of these groups in the early years but declines over time.

Early-career and later-career retention are distinct workforce challenges. Only about a quarter of new hires are expected to remain 20 years. Among employees who reach five years, however, 53 percent are expected to remain through year 20 and 45 percent through year 30. These patterns suggest that different approaches may be needed to address turnover at different career stages.

Differences in retention translate into substantial differences in expected years of service over a career. Over a 30-year horizon, new hires are expected to complete 10.5 years of service on average, compared with 19.9 years among workers who reach five years (including the first five years). Among these workers, expected service ranges from 18 years for local employees to 22.9 years for police/fire employees.