Industry News

On July 16, 2025, the National Conference of Public Employee Retirement Systems (NCPERS) released its report, the Unintended Consequences: How Scaling Back Public Pensions Puts Government Revenues at Risk. The report provides a comprehensive analysis of state and local revenues generated from retiree spending of pension benefits and the investment of pension assets to taxpayer contributions for public pensions. The 2025 report updates the original report published in 2018 and subsequent 2020 edition. 

The study analyzed how investment and spending related to public pension funds affect state and local economies and revenues. According to the report, public pension funds had a positive financial impact on the U.S. economy contributing $2.9 trillion in 2023 with $1.9 trillion from the investment of pension fund assets and $980.7 billion from retiree spending of pension checks.   

Some of the other key findings include:

• Economic growth attributable to public pensions generated about $661.9 billion in state and local tax revenues. After taking taxpayer contributions into account of $216.7 billion, the net positive revenue impact was $445.2 billion.
• The trend in net revenue gain from public pensions has grown steadily from 2016 in 43 states.
• In 2023, every dollar that taxpayers contributed to public pensions generated $13.41 in economic activity.

Before considering reforms, the findings indicate that policymakers should evaluate the economic impact of public pensions holistically. In the short term, reducing benefits or closing pension plans may seem to save money, but the long-term costs may reduce economic activity and public services, increase taxpayer burdens, and reduce retirement security for public servants.

The report concludes, “Going forward, efforts to preserve and strengthen public pensions should be paired with a broader reassessment of state and local revenue systems. This includes identifying ways to ensure tax structures reflect modern economic realities and considering areas where tax benefits or exemptions may be eroding the revenue base. In this context, thoughtful, evidence-based policy decisions are essential to maintaining the long-term sustainability and benefits of public pensions.”

The analysis was based on historical state-level data from public sources including the Bureau of Economic Analysis (BEA), Bureau of Labor Statistics (BLS) and U.S. Census Bureau. 

The report is available here.