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New NIRS Case Study Highlights Hidden Costs of Cutting Pensions

February 12, 2018

Tallahassee – The National Institute on Retirement Security (NIRS) has released a new case study on the negative impact of cuts to retirement benefits for public safety personnel. The paper follows the domino effects of a decision by Palm Beach in 2012 to close its defined benefit (guaranteed) pension plans for all employees and replace them with defined contribution 401(k)-style accounts. The study highlights the resulting effects on city services, public safety and finances. Palm Beach officials subsequently restored the city’s pension plans for fire and police.

The case study chronicles in detail the city's loss of experienced personnel, the inability to attract new hires, and the cost of replacing the attrition. At the 2016 Florida Public Pension Plan Trustee Association (FPPTA) Annual Conference, a news hour segment on the story featured an interview with Damon Patrick, a 15-year veteran of the Palm Beach Fire Department. He told the audience how the loss of experience takes its toll on employees:

"When a critical intervention comes along, everybody looks around the crew, and there’s one or two guys that are experienced and they get thrown into the fire. They’ve got to perform, and if they don’t perform they’re going to be liable. It happens over and over and over again. It’s a very high liability situation. It’s very scary on a daily basis.”

The NIRS study confirmed the FPPTA's findings reporting, “Employees’ reactions to the Town Council dismantling the DB pension benefit were swift and caused a mass exodus of public safety officers. In addition to the 20 percent of the town’s workforce that retired, 109 protective officers, including 53 experienced, vested police officers and firefighters, left before retirement in the next four years.”

The FPPTA reported similar problems in other Florida cities during 2015-2016, including in Jacksonville, Sarasota and Long Boat Key. The NIRS study in conclusion cites examples from Kentucky, Alaska, Wisconsin and Rhode Island.

Often overlooked in cost-benefit analyses of pension plans is the cost of turnover in high profile positions like fire and police. This can have a deeply negative affect on a city’s budget, and also its public safety – a cost that reverberates all the way down to quality of life and property values.

A copy of the case study can be obtain at  A webinar will be held February 15, 2018.


Webinar on Thurs., February 15th at 1 PM EST           Register Here