By David Brandolph
Payments from traditional pension plans generated a staggering $1.3 trillion in U.S. economic output in 2018, according to a report recently released by the National Institute on Retirement Security (NIRS).
The NIRS report, Pensionomics 2021: Measuring the Economic Impact of Defined Benefit Pension Expenditures, showed that, in 2018, some $578.7 billion in pension benefits were paid to 23.8 million American retirees, including $44.2 billion paid to some 3.8 million beneficiaries of multiemployer plans. These are plans which are jointly operated by a union and two or more employers.
The report provides powerful evidence that multiemployer pensions need to be protected as the U.S. economy struggles to recover from the coronavirus recession. That’s why PRC believes that Congress and the incoming Biden Administration must immediately address a pension insolvency problem that threatens the benefits of more than 1.3 million plan retirees, as well as the viability of the federal Pension Benefit Guaranty Corporation’s fund that backs plan benefits.
It’s clear from the report that permitting multiemployer plan cuts would have an oversized and devastating impact on the U.S. economy. That’s because, as the report indicates, pension expenditures have a large multiplier effect in that each dollar of pension benefit landing in the hands of a retiree supports $2.19 in economic benefit nationally.
In aggregate, retirees’ expenditures from pension payments in 2018 supported nearly 7 million jobs, added more than $700 billion to the nation’s Gross Domestic Product (GDP) and enhanced government tax revenue to the tune of nearly $192 billion, according to the report.