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Feb 24, 2021 2021 | Measuring the Economic Impact of DB Pension Expenditures

"A new report finds that economic gains attributable to private and public sector defined benefit (DB) pensions in the U.S. are substantial. Retiree spending of pension benefits in 2018 generated $1.3 trillion in total economic output, supporting nearly seven million jobs across the nation. Pension spending also added nearly $192 billion to government coffers at the federal, state and local levels."

Here is the economic impact of Michigan Pensions

A recent report from the National Institute on Retirement Security found the economic impact of defined benefit pensions support a significant amount of economic activity in the state of Michigan.  Pension benefits received by retirees are spent in the local community.  This spending ripples through the economy, as one person’s spending becomes another person’s income, creating a multiplier effect.  In 2018, expenditures stemming from State and local pensions in Michigan supported:

• 81,593 jobs that paid $4.2 billion in wages and salaries.

• $13.2 billion in total economic output.

• $2.1 billion in federal, State, and local tax revenue.

Each dollar paid out in pension benefits supported $1.48 in total economic activity in Michigan.  Each dollar “invested” by Michigan taxpayers in these pension plans supported $5.62 in total economic activity in the State.

The average pension benefit received was $1,924 per month or $23,090 per year.  These modest benefits provide retired teachers, public safety personnel, State employees, and others who served the public during their working careers income to meet basic needs in retirement.  Between 1993 and 2018, 26.35 percent of Michigan’s pension fund receipts came from employer contributions, 7.16 percent from employee contributions, and 66.49 percent from investment earnings.  Earnings on investments and employee contributions – not taxpayer based contributions – have historically made up the bulk of pension fund receipts."