The narrative promoted by anti-pension ideologues is that defined benefit pensions are a thing of the past. These pension critics falsely claim that cities and states are abandoning pensions. One city in Missouri is proving them wrong. The city of Webster Groves switched from a defined contribution 401(k) plan to a defined benefit pension through the Local Government Employees Retirement System (LAGERS) and is seeing great results.
LAGERS is a statewide public pension system for local government employees in Missouri. It is the largest retirement system in the state and serves 33,000 active members who work for almost 700 employers. LAGERS provides a secure retirement for firefighters, EMTs, librarians, and many other local government employees. The system is also 95% funded, a clear sign of the strength of the system.
It is not surprising then that the city of Webster Groves would want to join LAGERS. Before 2013, Webster Groves offered a defined contribution 401(k) plan to its employees, including its police officers and firefighters. After the Great Recession ravaged their savings, city employees began asking about other retirement plan options. City leadership began studying the possibility of joining LAGERS. Before making the final decision, city leaders asked public employees to vote and 93% voted in favor of joining the pension system.
As one Webster Groves police officer said, joining LAGERS was a “huge breath of fresh air.” Many city employees didn’t know how to manage their money in their 401(k) plan and didn’t know how much they would have in retirement, due to the risky and unreliable nature of 401(k) plans. A Webster Groves firefighter said it best: LAGERS “provides predictability and stability.”
Since joining LAGERS, Webster Groves has had police officers move from other cities to join the force in Webster Groves in order to earn a pension. This is not surprising, as public pensions remain a valuable tool for recruiting and retaining public employees. Many cities and states, such as Palm Beach, FL, and the state of Utah, have struggled with recruitment and retention after moving away from a defined benefit pension plan.
Webster Groves is not an outlier in Missouri either. According to LAGERS, in the past five years, 78 local governments have joined the system. Of those, more than half switched from offering a defined contribution plan to offering a LAGERS pension. The others either merged their defined benefit plan with the LAGERS plan or offered no retirement plan at all and chose the security of a LAGERS pension over the risk of a 401(k) plan.
Webster Groves describes itself as “a small town in a big city.” Like many towns and cities across the nation, Webster Groves has provided for the retirement security of its public employees by offering a defined benefit pension. You can learn more about the Webster Groves experience by watching this video profile recorded by LAGERS.