Pension Spending Supports 6.2 Million Jobs, $943 Billion in Economic Input

We’re passing this along from The National Institute on Retirement Security

Pensionomics 2014: Measuring the Economic Impact of DB Pension Expenditures reports the economic impacts of public and private pension plans. It finds that retiree pension provides important support to the economy.

Pension Spending Supports 6.2 Million Jobs, $943 Billion In Economic Output Nationwide

WASHINGTON, D.C. July 30, 2014 – A new economic impact study finds that pension benefit expenditures provide important economic support to the economy, including more than $943 billion in total economic output and 6.2 million jobs in the United States. Download state fact sheets here.

This biennial study by the National Institute on Retirement Security finds that jobs supported by pension expenditures in 2012 paid nearly $307 billion in labor income. The analysis indicates that pension spending by retirees supported some $135 billion in tax revenue at the local, state and federal levels. Pensionomics 2014 includes a business and a retiree profile to demonstrate the importance of pensions to retirees, businesses in the economy and government coffers.

The study also calculates that for 2012:

Nearly $477 billion in pension benefits were paid to 24 million retired Americans including:

§  $228.5 billion paid to some 9.0 million retired employees of state and local government and their beneficiaries (typically surviving spouses);

§  $70.7 billion paid to some 2.5 million federal government retirees and beneficiaries; and

§  $175.6 billion paid to some 12.7 million private sector retirees and beneficiaries.

Expenditures made out of those payments collectively supported:

·         6.2 million American jobs that paid nearly $307 billion in labor income;

·         $943 billion in total economic output nationwide;

·         $555 billion in value added (GDP); and

·         $135 billion in federal, state, and local tax revenue.

Pension expenditures have large multiplier effects:

·         Each dollar paid out in pension benefits supported $1.98 in total economic output nationally; and

·         Each taxpayer dollar contributed to state and local pensions supported $8.06 in total output nationally. This represents the leverage afforded by robust long-term investment returns and shared funding responsibility by employers and employees.

The largest employment impacts occurred in the food services, real estate, health care, and retail trade sectors.

The study is authored by Nari Rhee, Ph.D., NIRS manager of research. It was conducted using the most current data available from the U.S. Census Bureau and IMPLAN, an input-output modeling software widely used by industry and governments analysts.

The National Institute on Retirement Security is a non-profit, non-partisan organization established to contribute to informed policymaking by fostering a deep understanding of the value of retirement security to employees, employers, and the economy as a whole. Located in Washington, D.C., NIRS’ diverse membership includes financial services firms, employee benefit plans, trade associations, and other retirement service providers.