What are the challenges of defined benefit pensions for the police?

By Joan Hill

Can I afford to retire comfortably?

For most people, the answer comes down to net worth and whether they have been saving intentionally. Hopefully there is a meaningful 401(k) balance in the equation. But how does a police officer’s defined benefit pension compare to a defined contribution plan like a 401(k)?

Suppose, for example, that a male police officer will retire at age 60 with a pension of $82,000. He has never been married and his pension benefits never increase. We can use the graphs in Figure 1 below to estimate how much money his pension will bring in retirement. The agent 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 could s expect to live after retirement. So the value of his pension can be calculated like this: $82,000 x 19.8 years of retirement = $1,623,600 to live out the rest of his life.

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

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

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

In fact, when agencies move away from defined benefit pension plans, mid-career agents tend to leave. When the Palm Beach Police Department dramatically reduced its defined benefit pensions, “the city learned […] a painful and costly lesson that pensions are an essential workforce management tool for recruiting, retaining and retiring public employees. [2]


Unfortunately, the age-old challenge of defined benefit pensions is mismanagement. Politicians tend to underfund, take risks and reallocate retirement assets. This creates retreat risks for the police that officers are often not even aware of.

The Chicago Tribune summed up the problem well in a 2014 article about the Illinois pension crisis: “If I had a can every time the cliché about ‘throwing the can in the road’ was rightly invoked to describe this situation,” Eric Zorn writes, “I could send my twins to college by cashing in at the recycling center.” [3]

And yet there is 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 did it the old-fashioned way, with sound actuarial principles applied consistently. Each year, our board of directors calculates what the government units must contribute, and 99.9% of them comply. We do not sell our assets to pay benefits. We know that winter comes every year, and we have to plan for slowdowns. We always remember that we are here for the long haul. [3] Too bad that kind of stewardship is hard to find.

“Public pensions are regulated by a thin patchwork of state and local laws,” wrote “Pension Detective” Ted Siedle, a former SEC attorney, in a September 2021 article that argues for brave watch dogseven among retirees themselves. [5] Siedle points out that “everything that is not clearly illegal under applicable law can probably be avoided”. [5] He also suggests that agents maintain a healthy distrust when confronted with the performance results of retirement investments and offers the following guidance.

  • The investment performance of pension plans should be presented for periods of one, three, five and ten years, with an emphasis on the long term.
  • The landmarks are revealing. Suppose that when a benchmark is changed, it is because the performance against the benchmark is bad. “Custom” benchmarks are confusing 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 want or expect to stick to one career for their entire lives – let alone one employer.

As a result, some argue that defined benefit pension plans are no longer as attractive as they once were. A recent study on police recruitment concluded that “money is no longer a strong enough motivator; young people want a better quality of life to match employment. [7] The study points to declining average length of service and cites the results of another recruitment study where more than half of survey respondents “said they would only be interested in police patrols like a ladder to another career”. [7]

From the perspective of a recruit changing jobs, it can be argued that defined contribution plans are more attractive than deferred pensions. Defined contribution plans have superior portability and don’t impose financial incentives, also known as “golden handcuffs,” for sticking with 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? Along the same lines, we might consider whether we want cops with the best lifestyles or cops who see their jobs as a stepping stone to other careers.

Either way, there’s no denying that police numbers change as new recruits apply and agencies compete to hire them. Recruits considering long-term careers in law enforcement would be wise to analyze the numbers when comparing police departments, particularly if incentives replace or reduce defined-benefit pensions.


With defined contribution plans, the risk is yours, not only in terms of investment returns, but also in terms of what might be called the risk of “failure to plan”. Inertia can be a costly choice when you’re faced with tricky tasks like understanding an employer’s 401(k) match, properly diversifying investments, and determining whether it’s worth taking an early withdrawal penalty or manage the complexities of the bearing.

In a defined benefit plan, the risk lies with the taxpayers. Yet, as the article “Why pensions are bad for cops” sums it up so well, a police officer’s “guaranteed” pension can fall prey to “hidden practices of mismanagement, political interference, financing, assumed excessive rates of return that are not achieved, and the risk that future generations of managers will reduce your pension benefits to solve their underfunding problems. [8]

Each of us, regardless of occupation 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 effective and ongoing savings discipline. Finally, work with a knowledgeable financial advisor who is familiar with policing careers or willing to carefully analyze the details of your particular retirement system. Be proactive and have a happy retirement.


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

2. National Institute for Retirement Security. A new case study examines how the dismantling of pensions triggered the mass exodus of public safety workers. February 8, 2018.

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

4. T link. Public pensions work – and these three systems prove it. National Coalition of Public Pensions, September 7, 2016.

5. Siedle T. Your state pension is not fully protected by law. GLOCALProv, September 9, 2021.

6. Siedle T. Coronavirus side effect: Lying feverish pension. GLOCALProv, April 7, 2020.

7. Police Executive Search Forum. The workforce crisis and what police departments are doing to address 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 UAVs. Connect with her on LinkedIn.

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