If you are asking, “What other side?” you’ve demonstrated the point.
The other side is that the pension benefits are distributed to millions of people across the United States, and they do things with that money. For most pension recipients, it’s not much, probably averaging in the $1,500-3,000 per month range, but when spread out over millions of people it adds up to a significant additive to our economy.
To prove this, the National Institute on Retirement Security conducted a major study of the after-effects of pensions, when the benefits are distributed to retirees. The NIRS study offers some very significant findings that most people wouldn’t think about or know because of their focus on one side of the coin.
As such, I strongly recommend reading the NIRS report, Pensionomics 2012: Measuring the Economic Impact of DB Pension Expenditures, which offers these findings for Texas:
- In 2009, 478,767 residents of Texas received a total of $10.2 billion in pension benefits from state and local pension plans.
- Their average pension benefit was $1,776 per month or a modest $21,318 per year. These benefits were for retired teachers, public safety personnel, and others who served the public during their working careers.
- Between 1993 and 2009, 19.91% of Texas’ pension fund receipts came from employer contributions, 17.05% from employee contributions, and 63.04% from investment earnings. [emphasis added].
- Retiree expenditures stemming from state and local pension plan benefits supported 128,204 jobs in the state. This represents 1.1 % of Texas’ labor force.
- The total income to state residents supported by pension expenditures was $6.0 billion.
- Retirees’ expenditures from these benefits supported a total of $20.2 billion in total economic output in and $11.2 billion in value added in the state.
- Nationally, state and local pensions support 2.9 million jobs and $443 billion in economic activity.
It is our hope that TEXPERS played a part in that equation, having fulfilled our mission over 23 years to provide pension investment and benefits administration education to our members. – Max Patterson