March 6, 2012 (PLANSPONSOR.com) - A new economic impact study finds that pension benefit expenditures provide an economic stimulus to the economy, including more than $1 trillion in total economic output in the U.S.
"Pensionomics 2012: Measuring the Economic Impact of Defined Benefit Pension Expenditures," released by the National Institute on Retirement Security (NIRS), reports the national economic impacts of public and private pension plans, as well as the impact of state and local plans on a state-by-state basis. The study calculates that pension expenditures supported some 6.5 million American jobs that paid nearly $315 billion in income to other Americans in 2009.
More than $1 trillion in total economic output and $553 billion in value added in the U.S. was attributable to pension benefits. These expenditures also supported some $134 billion in tax revenue at the local, state and federal levels.
“Understanding the economic impact of pension spending is critical as our economy struggles to recover and create jobs,” said Ilana Boivie, report author and NIRS economist. “The secure monthly income provided by pensions can act as an ‘automatic stabilizer.’ That is, retirees with a reliable pension check can continue to spend on basic needs even during tough economic times like we saw in 2009.”
The study also finds that:
- Over $426 billion in public and private pension benefits were paid to nearly 19 million retired Americans in 2009.
- For each dollar paid out in pension benefits, $2.37 in total economic output was supported. For every dollar contributed by taxpayers to state and local pension funds, $8.72 in total output was supported nationally.
- Nationally, the largest employment impacts were seen in the food services, real estate, health care, and retail trade sectors.
The analysis 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 full report is available at http://www.nirsonline.org, along with a national map and State Fact Sheets.