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Police pensions under tension

How an age-old challenge and a new generation are chipping away at defined-benefit pensions


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By Joan Hill

Can I afford to retire comfortably?

For most people, the answer comes down to net worth and if they’ve saved with intention. Hopefully, there’s a significant 401(k) balance in the equation. But how does a police officer’s defined-benefit pension stack up against a defined-contribution plan like a 401(k)?

Let’s assume, for instance, that a male police officer will retire at age 60 with a pension of $82,000. He’s never been married, and his pension benefit never increases. We can use the charts in Figure 1 below to estimate how much money his pension will provide in retirement. The officer should use the “Single Male” chart in the bottom row and look to the “Current Age” of 60 to find his multiplier of 19.8, which represents the number of years he might expect to live past retirement. Thus, the value of his pension can be calculated like this: $82,000 x 19.8 years of retirement = $1,623,600 to live on for the rest of his life.


Figure 1: Charts from “Annuitized Income and Optimal Equity Allocation” in the Journal of Financial Planning. [1]

It would take a high-paying job and many years of saving and successful investing to accumulate the same amount in a 401(k). Instead, this police officer earned a guaranteed income stream after surviving his uniquely risky career. This is the reason pensions are attractive and incentivize long public safety careers. They make police work a job worth fighting for.

In fact, when agencies move away from defined-benefit pensions, mid-career officers tend to leave. When the Palm Beach Police Department dramatically decreased its defined-benefit pensions, “the town learned […] a painful and costly lesson that pensions are a critical workforce management tool to recruit, retain and retire public employees.” [2]


Unfortunately, the age-old challenge to defined-benefit pensions is mismanagement. Politicians tend to underfund, take risks, and reallocate pension assets. This creates retirement risks for police that officers often don’t even know about.

The Chicago Tribune summed up the problem nicely in a 2014 article about the Illinois pension crisis: “If I had a can for every time the cliché about ‘kicking the can down the road’ has been appropriately invoked to describe this situation,” Eric Zorn writes, “I could put my twins through college by cashing in at the recycling center.” [3]

And yet, there are examples of successful defined-benefit pensions [4], even in Illinois. “It’s not rocket science,” said Louis Kosiba, executive director of the Illinois Municipal Retirement Fund. “We’ve done it the old-fashioned way, with sound actuarial principles applied consistently. Each year our board of trustees calculates what the units of government need to contribute, and 99.9 percent of them comply. We don’t sell off our assets to pay benefits. We know that winter comes every year, and we have to plan for downturns. We always remember that we’re in this for the long term.” [3] Too bad this type of stewardship is hard to find.

“Public pensions are regulated by a thin patchwork quilt of state and local laws,” wrote “Pension Detective” Ted Siedle, a former SEC lawyer, in a September 2021 article that makes a case for brave watchdogs, even among pensioners themselves. [5] Siedle points out that, “anything that’s not clearly illegal under applicable law can probably be gotten away with.” [5] He also suggests that officers retain a healthy suspicion when presented with pension investment performance results and offers the following pointers.

  • Pension investment performance should be shown for one-, three-, five- and 10-year periods with an emphasis on the long-term.
  • Benchmarks are telling. Assume that when a benchmark is changed, it’s because performance compared to the benchmark is bad. “Custom” benchmarks are confusing on purpose and easy to manipulate. [6]


A new challenge for defined-benefit pensions comes from police recruits themselves. These days, it’s rare to find recruits who desire or expect to stick with one career for their entire lives – let alone one employer.

Because of this fact, some argue that defined-benefit pensions are not as attractive as they used to be. One recent police recruitment study concluded that “money is no longer a strong enough motivator; young people want a higher quality of life to match the job.” [7] The study points out that the average length of service is declining and cites another recruiting study’s findings where more than half of survey respondents “said they would only be interested in police patrol as a ladder to a different career.” [7]

From a job-hopping recruit’s perspective, an argument can be made that defined-contribution plans are more appealing than backloaded pensions. Defined-contribution plans have superior portability and don’t impose financial incentives, also known as “golden handcuffs,” for sticking with any one agency.

In her excellent and popular “A letter to the American public: Why you must decide what you want from cops,” Kathleen Dias asks, rhetorically, “Do we want the cheapest cops possible?” In the same vein, we might ask whether we want cops with the best lifestyles or cops who view their work as stepping-stones to other careers.

Either way, there is no denying that the police workforce is changing as new recruits make demands and agencies compete to hire them. Recruits who envision long-term careers in law enforcement would be wise to run the numbers as they compare police agencies, especially if incentives replace or reduce defined-benefit pensions.


With defined-contribution plans, the risk is all yours, not only in terms of investment performance but also in what could be called “failure-to-plan” risk. Inertia can be a costly choice when you’re met with hairy tasks like understanding an employer’s 401(k) match, diversifying investments properly, and figuring out whether it’s worth it to take an early-withdrawal penalty, or dealing with rollover complexities.

In a defined-benefit plan, the risk lies with the taxpayers. Still, as so nicely summarized in “Why Pensions are Bad for Cops,” a police officer’s “guaranteed” pension can fall prey to “hidden mismanagement practices, political interference, underfunding, excessive assumed rates of return that fail to be achieved, and the risk that future generations of managers will cut your pension benefit to solve their underfunding problems.” [8]

Each of us, no matter our profession or employer, must take responsibility for our own retirement planning. Do your best to cultivate more than one source of retirement income. Don’t underestimate the positive impacts of starting early and maintaining an efficient and continuous saving discipline. Finally, work with a competent financial advisor who is familiar with police careers or who is willing to carefully analyze the details of your particular retirement system. Be proactive and have a happy retirement.


1. Blanchett DM, Finke M. Annuitized income and optimal equity allocation. Journal of Financial Planning, November 2018.

2. National Institute on Retirement Security. New Case Study Examines How Dismantling Pensions Triggered Mass Exodus of Public Safety Workers. February 8, 2018.

3. Zorn E. Yes, the pension crisis is an emergency. But whose fault is that? Chicago Tribune, May 18, 2014.

4. Bond T. Public Pensions Work - And These Three Systems Prove It. National Public Pension Coalition, September 7, 2016.

5. Siedle T. Your State Pension is Not Fully Protected Under Law. GOLOCALProv, September 9, 2021.

6. Siedle T. Coronavirus Side Effect: Feverish Pension Lying. GOLOCALProv, April 7, 2020.

7. Police Executive Research Forum. The Workforce Crisis, and What Police Agencies Are Doing About It. September 2019.

8. Endres M. Why Pensions are Bad for Cops (And What to Replace Them With). Law Enforcement Today, February 22, 2019.

About the author

Joan Hill is a freelance writer whose husband is a retired law enforcement officer and founder of LE Drones. Connect with her on LinkedIn.