Public Sector Workers Largely Retirement Ready, but Gaps Persist

Public sector employees have long been associated with higher levels of retirement preparedness than their private sector peers, because they have immediate access to a pension. However, Voya Financial Inc.’s recent report, “Beyond the Pension: What Really Drives Retirement Confidence for Public Employees,” found public workers lagging in knowledge, engagement and financial behavior.

According to the report, 89% of government workers surveyed said they are prepared for retirement, but nearly 80% said they wanted help making investment decisions.

“Pensions provide a strong foundation, but employees need help connecting pensions, savings and everyday finances,” wrote Gavin Gruenberg, Voya Financial’s government market retirement sales leader, in an email to PLANDVISER. “It’s also very important to understand the details behind pension benefits.”

Adviser Engagement

One of the significant findings from the report is the role financial advisers play in boosting confidence.

Government employees who worked with an adviser were far more likely than those without one to report increased confidence in meeting their retirement goals over the past two years (57% vs. 35%).

According to the report, engagement with professional financial advice was slightly imbalanced. Just 54% of government employees reported meeting with a financial adviser in the past year, compared with 60% of nongovernment workers.

“Advisers have a clear opportunity to help employees turn available resources into meaningful action,” Gruenberg wrote. “It’s not enough to offer tools and resources. Advisers play a key role in helping employees engage with and use them effectively.”

Pension Literacy

Although pensions are central to public sector retirement planning, many surveyed employees reported lacking a clear understanding of their benefits.

The survey found that workers who knew their pension plan tier were significantly more likely to feel confident about retirement than those who did not (51% vs. 32%). Yet 21% of respondents said they were unsure which tier they belonged to.

Experts say that lack of clarity can have real financial consequences. Employees who overestimate their pension benefits may save too little in defined contribution plans, while those with more generous benefits may allocate too much to retirement savings at the expense of other financial priorities.

“Public sector employees have a solid foundation, but many still need help translating that into informed financial decisions,” Gruenberg wrote.

The report reinforced the benefits that can be realized when advisers take a holistic approach to public sector retirement planning.

The findings also emphasized the value of ongoing engagement. The report found that public workers who connected with advisers were more confident, yet many were not consistently using available guidance.

Ultimately, Gruenberg emphasized the need for public sector plan participants to do more than rely on their pensions.

“The focus is moving from having a strong retirement foundation to helping employees fully engage with and act on it,” he wrote.