Pensions
Public Pensions See Improvements in Recruitment, Retention
Plans have had a better time hiring and holding onto talent, according to a report from NCPERS.
Reported by Matt Toledo
When seeking outstanding employees, public pension funds have long struggled to compete with the private sector, where salaries are often higher and jobs in major population centers are abundant.
A survey from the National Conference on Public Employee Retirement Systems and CBIZ Inc. of 173 public plans in the U.S., which manage a combined $5.9 trillion in assets, found that, at the moment, pension funds are finding it easier to attract and retain skilled staff.
At a time when the labor market is tightening, approximately 62% of respondents reported no difficulty in their ability to attract talent, up 4.8 percentage points from last year’s survey and a significant increase from the inaugural NCPERS survey in 2022, when 63% of respondents said that recruiting and retaining staff was or was expected to be problematic.
“Overall, public plans’ recruitment and retention continue to improve coming out of [the COVID-19 pandemic],” says Hank Kim, CEO of NCPERS. “It is uneven, and there are some challenges, particularly in plans that are in distant places or maybe [locations] not near a population center. But on the whole, the recruitment and retention of qualified personnel is better than where we were, certainly five years ago.”
Despite the improvement, in this year’s survey, 18.4% of respondents said that their ability to attract and retain skilled staff was starting to become a problem, while 11.7% said they expected it to be a problem soon and 7.9% said it was a significant problem.
Benefits Improve, but Compensation Stays the Course
As part of the effort to attract and retain employees, public pension funds are improving their benefits. For example, flexible and remote work are now an industry standard, with 80.3% of public plans surveyed offering flexible hybrid schedules, and 72% offering remote work.
Kim notes that remote work is allowing plans to access talent in the main hubs for finance and investment professionals.
“The pool tends to be in New York, Chicago, San Francisco, [Los Angeles]—population centers,” Kim says. “Allowing some of these people to work remotely really enhances the ability of the plan to attract the most talented of employees.”
Salaries appear to mostly be holding steady, with projected increases of 3.7% for the next fiscal year, just barely ahead of the pace of inflation; the latest Consumer Price Index stood at 3.5%.
AI in the Pension Workforce
While many workers are worried artificial intelligence will render their job irrelevant, Kim sees AI as increasing the demand for pension staff, rather than replacing jobs.
“Plans that have been at the vanguard of implementing AI into their processes really see it as a force multiplier, rather than a job eliminator,” Kim says. “There is always human oversight and review of any AI results, and it’s sort of akin to the 1980s, with the personal computing boom, [or] maybe the ’90s and 2000s, with the boom of the internet. … It doesn’t mean that AI is going to take your job away. What it does mean is that you have to be proficient in it.”
Setting boundaries and establishing best practices will be important, Kim says, in helping pensions successfully integrate AI.
“Going forward, I think what we’re seeing is employees need to understand the uses and certainly the limitations of AI,” Kim says. “Employers, particularly public plans, first and foremost need to have some sort of governance structure around AI and its use, and then [second,] foster an environment where its employees can utilize the tool, and then [third,] provide oversight so there is quality assurance.”