An industry long challenged by talent shortages and compensation restraints has reached a turning point, according to new research from the National Conference on Public Employee Retirement Systems and CBIZ Inc.
The 2025 Public Pension Compensation Survey found 57% of public pension funds reported no issues with recruitment or retention of skilled staff, a nearly 8-percentage-point increase since the 2024 survey and a 20-percentage-point increase from 2022.
According to MetLife’s 2025 Enduring Retirement Model Study, published in April, plan sponsors with a defined benefit plan—a common offering from public funds—most commonly said they provide a pension benefit to attract and retain talent (57%) and promote long-term employment (47%). NCPERS’ new research indicated those goals are increasingly being fulfilled.
The median tenure for pension staff, consistent with other segments of the public sector, is now 6.2 years—almost double that of workers in the private sector (3.5 years). In addition, more than 70% of public funds continue to offer remote work and flexible schedules to their employees, a benefit that has in recent years been in high demand and has been viewed by employers as an avenue to attract and retain workers.
Public pension salary growth is now normalizing, following a 2024 surge the research deemed a “necessary correction,” after salaries trailed private sector wages following the pandemic. The average overall salary increase reported this year was 4.7%, compared with the 8.3% reported in 2024. Respondents indicated that the average salary budget increase for the upcoming fiscal year will be 4.1%.
The slowed increase could be attributed in part to employees leaving their positions or retiring at the top of their earning potential, says Joe Rice, CBIZ’s managing director of compensation consulting. A position may be backfilled by an employee with less experience—and likely a lower starting salary than the person who left. Another possible factor contributing to slower wage growth is the unpredictable impact of economic conditions such as tariffs, Rice says.
The public sector departments with the largest average increases in salary were human resources (8.3%), audit (7.9%), investments (7%), benefits (5.1%) and information technology (5%).
This was the first year the survey captured data on compensation philosophy, the framework funds use to make decisions involving employee compensation, including pay transparency and pay for performance. More than 80% of public pensions surveyed use a formal compensation philosophy to guide their decisionmaking. Of those, 78% target the 50th base salary percentile of market pay.
“That speaks to the overall governance within these organizations—that they’ve taken the [framework] to create a path that they then follow,” Rice says. “I don’t know that we would see that level of having a formal compensation policy in other industries.”
Hank Kim, executive director of NCPERS, says that while the compensation survey results show that public funds are in a better place than they were as recently as four years ago, public plans are not monolithic. For instance, some outside of financial hubs like New York may be struggling to recruit investment professionals. However, he said some funds have taken steps to address that recruitment gap, such as by setting up satellite offices in financial hubs.
“Overall, I think the outcome [of the survey] is positive,” says Kim. “But there are still lingering challenges for state and local governments.”
The survey, conducted from April through July, includes data from nearly 170 public pension funds that collectively administer 4,813 public employee retirement systems. The organizations manage a combined $6 trillion in assets and employ more than 21,000 full-time employees.
Tags: compensation, NCPERS, public pensions