It’s going to be a long time before many younger state workers are able to reap the benefits of their pension systems.

A recent Urban Institute analysis finds employees hired at age 25 in half of traditional state and local systems must work 20 or more years to start receiving pension payments worth more than their contributions. For others, the wait extends 30 years or even longer.

The recent rounds of pension reforms widened the time period before many participating employees can begin earning employer-financed benefits. The Urban Institute argues that, for those disproportionally affected, this is cause for concern.

“We want these plans to keep up with the times and be appropriate with the modern labor force when people are changing jobs more frequently and working longer,” said Richard Johnson, who directs the Urban Institute’s retirement policy program.

Retirement eligibility is typically based on a combination of a person’s age and years of service. In most systems, shorter-tenured workers' contributions help subsidize benefits of longtime employees. Many of these short-term workers actually lose money because the interest from their pension plans is less than what they could earn by investing money on their own, Johnson said.

Much of the reforms state legislatures passed in recent years raised contribution rates, while others increased retirement ages. Such adjustments pushed up the number of service years plan participants need to begin accumulating benefits from their employers.

For the most part, younger workers incurred far greater benefit cuts than those nearing the end of their careers. The changes have prompted some public sector groups to warn that cuts could deter newcomers from entering public service. A Governing analysis of retirement data published earlier this year also found pension reforms contributed to sizable increases in employee retirements in at least six states.

The following chart, compiled by the Urban Institute, shows how much longer 25-year-old new hires will need to work before accumulating employer-financed benefits from 128 state plans subject to reforms.

According to the Urban Institute’s Johnson, too many retirement systems aren’t distributing benefits fairly among members. “It’s important that even those who only stay on the job for 10 years get something out of the plan,” he said.

For some systems, the time it takes to accumulate employer-financed systems extends more than three decades. In Montana, 25-year-old employees hired after 2011 must work 36 years before accumulating employer-financed benefits from the state’s Public Employees’ Retirement System. New Ohio teachers of the same age retiring after 2026 will similarly need to work 35 years in order to earn employer-backed benefits from the State Teachers Retirement System of Ohio, according to Urban Institute calculations.

How systems are structured varies across occupations. The Urban Institute found new age-25 teaching hires must work a median of 24 years before receiving employer-financed benefits. For police and fire hires, it’s 18 years.

Because of some plans’ design, employees could see drastic swings in retirement benefits over the course of only one or two years. Police and fire pension plans, in particular, are notorious for such retirement benefit spikes. As a result, employees run the risk of losing out if they need to move or change jobs for various reasons.

The following table lists the years of service it takes to begin earning employer-financed benefits for 612 defined-benefit plans. Calculations shown are for employees hired at age 25, as computed by the Urban Institute using each plan’s adopted interest rate and inflation assumptions.

Source: Urban Institute, Program on Retirement Policy

For additional details on individual pension systems, see the Urban Institute’s new State and Local Employee Pension Plan database.