A new report highlights how spending by public sector retirees across the United States helped support jobs and local economies during the tumultuous first year of the COVID-19 pandemic.
In Pensionomics 2023, researchers from the National Institute on Retirement Security (NIRS) state public and private pension plans paid out nearly $613 billion in retirement benefits in 2020, resulting in $1.3 trillion in total economic output as retirees turned around and spent those dollars. Retirees also paid taxes on those benefits, paying nearly $158 billion to federal, state and local governments. In total, NIRS estimates retiree spending supported nearly 6.8 million U.S. jobs in 2020.
Pension benefits from state and local plans made up more than half of the pension benefits paid that year, totaling more than $334 billion, according to NIRS. In Colorado alone, public sector retirees received $5.5 billion in pension benefits in 2020, translating to $7.9 billion in total economic output and supporting 45,267 jobs. Those jobs represented 1.5 percent of the state’s total workforce.
Colorado PERA’s economic impact
PERA is the largest retirement plan serving public employees in Colorado with nearly 650,000 members.
More recently, in 2021, PERA paid $4.35 billion in retirement benefits to more than 110,000 Colorado retirees. That resulted in $6.8 billion in total economic output and supported 31,449 jobs statewide, according to a report by Pacey Economics. In addition, retirees paid $382.2 million in state and local taxes on those PERA benefits.
READ MORE: PERA Benefits Contribute Billions of Dollars to State Economy, Support Thousands of Jobs
The steady stream of income that defined benefit pensions provide is an important economic driver, providing a measure of stability when it’s needed the most.
“Every month, PERA pays out hundreds of millions of dollars to retired public employees and their beneficiaries across Colorado, and those dollars are spent in their local communities,” said PERA Executive Director Ron Baker. “Retiree and beneficiary spending is a vital part of Colorado’s economy, and the stabilizing effect of that spending has been evident amid the economic uncertainty we’ve experienced in recent years.”
Defined benefitA mandatory retirement savings plan in which a participant’s future benefits are known or can be calculated, but contributions are subject to adjustments.
Right ! Glad we could help. Imagine how much more impact if PERA had not broken its contract in 2010, and we retirees actually had the 3.5% “guaranteed annual increase” that was part of our contract?
PERA Board & Staff (PERA BS) ought to use our money that goes into this website to address issues that matter to members instead of phoning-in recycled stories about the money PERA beneficiaries pump into the Colorado economy… blah blah blah we’re great, now cut our benefits again?
PERA ought to be lobbying for a COLA, or some kind of meaningful increase, in response to years of inflation eating into our benefits! There’s a Colorado bill for a temporary refundable tax credit (HB23-1016) which acknowledges the adverse impact of the 2018 legislation, SB-200, which eliminated a COLA (capped at 2%), and replaced it with what we currently have, i.e., an occasional increase based on fund solvency. The proposed tax credit bill (HB-1016) leaves a lot to be desired, but at least it acknowledges the impact of inflation on PERA retirees, which seems to be more than PERA BS does!