In a preliminary analysis conducted for the hearing, NIRS estimates that 2009 expenditures from public and private sector pension plans had a total economic impact of $756 billion; supported more than 5.3 million American jobs; and supported more than $121.5 billion in annual federal, state, local tax revenue.
“Pensions are a ‘high five’ for the U.S economy: investing $5.35 trillion in assets for the future, keeping some five million retired Americans out of poverty, supporting 5.3 million American jobs, and delivering retirement income at nearly 50% lower cost than individual defined contribution retirement accounts,” said Oakley, during the hearing, The Power of Pensions: Building a Strong Middle Class and Strong Economy.
She noted that: “When retirees have a stable and secure pension check, they don’t stick it under the mattress. They spend that income goods and services in their local communities, leaving a substantial economic footprint from coast to coast. That regular spending is critically important today as the economy struggles to recover. In contrast, retirees without a pension may be fearful to spend given the impact of the market crash on individual retirement accounts or because they worry about outliving their savings.”
Oakley testified that NIRS research finds Americans are highly anxious about their economic security in retirement, and they want leaders in Washington to take action. Polling research indicates that Americans believe that the disappearance of pensions has made it harder to achieve the “American Dream,” and more than 80% believe all workers should have access to a pension so they can be independent in retirement (see Americans Want Pensions Back).
She also highlighted that pension income plays a critical role in reducing the risk of poverty and hardship for older Americans. Referencing, The Pension Factor, Oakley reported that rate of poverty for older households in 2006 without pension income was six times greater than for households with a pension. Moreover, the billions of dollars in savings for public assistance due to pensions are significant given the fiscal pressures on government safety net programs across the country.
Oakley also testified that pensions are the most economically efficient retirement plans available. Due to their group nature, pensions can deliver the same level of retirement income as an individual 401(k) type savings account at half the cost. NIRS research indicates that it makes sense for pensions to be a centerpiece of retirement income policy and practice in light of current fiscal and economic constraints facing plan the nation.
A replay of the hearing and witness testimony is available here.