Most public service employees were influenced in their career choice by the promise of a robust public service pension, and many are now deeply worried about their future financial security, according to a newly released survey sponsored by Prudential Retirement.
The survey also found that most public servants have taken only the most basic steps to safeguard their long-term financial well-being.
The Economist Intelligence Unit conducted the survey in March of 1,877 public sector workers with varied backgrounds, functions and lengths of tenure throughout the U.S. The survey sample included baby boomers, Gen Xers and millennials.
Only 17% of survey respondents said they were “very confident” they would not run out of money in retirement, and even fewer were certain they could cover all of their medical expenses.
At the same time, 64% said a government pension had been a significant factor in their choice of public service employment. Fifty-eight percent expected a defined benefit plan to be one of their two primary sources of income in retirement, and 42% said a defined contribution plan. Only one-quarter planned to rely heavily on Social Security.
Prudential Retirement said this raised questions about how states and municipalities forced to cut back pensions will attract talent in the future.
It noted that U.S. public pension funds at all levels of government are dealing with a payout shortfall of some $3.4 trillion, citing an estimate by Stanford University’s Hoover Institution think tank.
In order to improve their pension positions, it said, virtually every state between 2009 and 2013 applied some combination of lower benefit accruals and higher employer contributions made possible with the federal government’s help. Higher employee contributions also became commonplace.
“Those who devote their lives to public service deserve a secure future,” Scott Boyd, head of tax-exempt markets for Prudential Retirement, said in a statement.
“Our survey highlights the need for the public sector to offer financial wellness solutions that address the retirement security issues of their workers.”
Most public employees in the poll believed that they were sufficiently knowledgeable to successfully manage their money over the long term. The data suggest otherwise.
About one-third of respondents said they were very confident about making financial planning decisions that will best provide for their future, and 81% were at least somewhat confident.
Although respondents said they planned to save (or were saving) for retirement, many appeared uncertain how best to make their money last, let alone grow. Fewer than one-third felt very confident about where to place retirement savings, and just 18% said they felt very confident in their ability to manage their investments wisely.
Barely half of U.S. public workers surveyed reported adhering to a budget, although an additional 29% said they planned to do so. The survey found this a recurring theme.