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Far from Draining Budgets, Public Pensions Generate Public Revenue

Photo Credit: NCPERS
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By AFSCME Staff Explore the Issues Pension Security

Wealthy special interests and billionaires in search of tax cuts have long attacked public pensions, arguing that taxpayers cannot afford such benefits for public service workers. But a new report by the National Conference on Public Employee Retirement Systems shows that public pensions in fact help state and local revenues.

Titled “Unintended Consequences: How Scaling Back Public Pensions Puts Government Revenues at Risk,” the report uses data to show that “reducing or even dismantling public pension benefits will ultimately backfire.”

The report finds, for example, that for every $1,000 of pension fund assets invested, the economy grows by $1,088.

“This amount may seem small,” the report notes, “but due to the size of the pension fund assets, $3.7 trillion in 2016, the effect on the economy and revenues is significant. The results show that investment of pension fund assets contributed $587.5 billion to the economy, which in turn yielded $125.7 billion in state and local revenues.”

The results are “a powerful rebuke to the argument that taxpayers cannot afford public pensions,” according to the report. “Instead, policy makers must preserve and enhance public pensions, building on this time-honored method of ensuring a dignified retirement to provide retirement security for all.”