The 154-page report by the CSUS Applied Research Center of Sacramento State University examined the economic ripple effects of the $13.8 billion in retirement benefits paid to 674,000 retirees and beneficiaries living in the state. Among other findings, the report found that every dollar contributed to CalPERS generates an $8.55 return for the state economy and for every dollar contributed to CalSTRS, $6.71.
The economic activity of the two funds outpaces the size of the forestry and fishing industries in the state and nearly equals the size of the hotel and accommodation industries. The overall economic output is more than the combined value of the export goods to California’s major trade partners, according to the report.
“This study puts an exclamation mark on what we already knew: retirees pension payments may seem like they are liabilities on the books of government, but in fact they represent billions and billions of dollars that contribute to the strength of state and local government,” said CalPERS Chief Executive Officer Fred Buenrostro, in a press release. “When you take into account that 75% of a CalPERS retiree pension payment comes from investment earnings, not tax dollars, it is even that much more impressive.”
Over the past ten years, CalPERS has earned at an average rate of 11.9% annually, and CalSTRS at 8.6%.