Defined benefit pensions, like the one offered by NYSTRS, provide a huge boost to economic output, jobs and tax revenue in all levels of the U.S. economy, according to a new study by the National Institute on Retirement Security (NIRS).
Retiree spending of pension benefits in 2018 – the most recent year studied – generated $1.3 trillion in total economic output, supporting about 6.9 million jobs across the country and adding $192 billion in tax revenue to government coffers, said the report, “Pensionomics 2021: Measuring the Economic Impact of Defined Benefit Pension Expenditures.”
In New York alone, expenditures stemming from state and local pensions in 2018 generated $48.2 billion in total economic output, supported 247,876 jobs that paid $17.6 billion in wages, and poured $8.3 billion into federal, state and local tax revenues, according to the report.
Especially during times of economic uncertainty, “retirees’ spending of their pension income is critical for sustaining and stabilizing consumer spending,” said Dan Doonan, NIRS executive director. Retirees with a pension can count on steady income every month, even in volatile times, which means they can continue their usual level of spending.
The NIRS report further noted that pension expenditures have a ripple or “multiplier” effect in the economy, as one person’s expenditures become another person’s income.
The analysis also found that each dollar paid out in pension benefits supported $2.19 in total economic output nationally. In addition, each taxpayer dollar contributed to state and local pensions supported $8.80 in total economic activity nationally.
“Virtually every state and local economy across the country benefits from the spending of pension checks,” the report said. “Pension expenditures may be especially vital to small or rural communities, where other steady sources of income may not be readily found if the local economy lacks diversity.”
Find the full report at nirsonline.org.