Industry News

On January 6, 2025, the National Institute on Retirement Security (NIRS) released its report, Pensionomics 2025: Measuring the Economic Impact of Defined Benefit Pension Expenditures. The biennial study calculates the national economic impacts of U.S pension plans. The study also examines the impact of state and local plans on a state-by-state basis.   

According to the study, each dollar of pension benefits paid to retirees supported $2.28 of the total U.S. economic output. In addition, these pension benefits help to support the economy, as well as jobs where retirees reside since those with monthly pension income continue spending on basic needs even during economic downturns.   

During the fiscal year ending in 2022, the study reports:  

• Public and private pension plans provided about $680.6 billion in benefits to about 26.3 million retirees and beneficiaries. Of this amount, $371.6 billion was paid to 12.0 million state and local government retirees and beneficiaries; $91.5 billion was paid to 2.7 million federal government beneficiaries; $217.4 billion was paid to 11.5 million private sector beneficiaries; $51.8 billion was paid to 4.1 million multiemployer beneficiaries; and $165.6 billion was paid to 7.4 million single-employer beneficiaries.
• These benefits supported more than $1.5 trillion in the total U.S. economic output and provided an estimated $871.0 billion in value added to the national economy.
• This, in turn, supported approximately 7.1 million American jobs paying more than $466.2 billion in total compensation, as well as $224.3 billion in annual federal, state and local tax revenues. The largest employment impacts were in food services, health care and retail trade industries.  

The study also finds that over the period from 1993 to 2022, government (i.e., taxpayer) contributions to public pension plans averaged 29.2% of the total annual plan receipts, with the remainder coming from investment earnings (58.9%) and employee contributions (11.9%). As a result, the study estimates that every dollar contributed by taxpayers to public pension funds supports an estimated $7.79 in total economic output.

The analysis was conducted using data from the U.S. Census Bureau and input-output modeling software (IMPLAN) to assess the economic impact. In addition to providing national estimates of economic activity, the report also estimates the economic impact of public pensions in all 50 states and provides fact sheets for each state.   

The report is available here.

A map with downloadable fact sheets for each state is available here.