NIRS’ Pensionomics 2025 Report

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Earlier this month, the National Institute on Retirement Security (NIRS) released its bi-annual Pensionomics report, which details how spending from defined-benefit pensions boosts economies in communities nationwide and continues to be a reliable economic driver for millions of people.

The report examines the impact of pensions on local economies nationwide by calculating the benefits paid to retirees and the subsequent spending generated by these benefits. This analysis includes tax revenue and local expenditures, which stimulate the broader economy, leading to growth and job creation.

NIRS found that in 2022, $680.60 billion in pension benefits were distributed to 26.3 million private and public sector retirees. Of that, $371.60 billion was paid to 12 million retired state and local public employees and beneficiaries.

These dollars stimulate the local economies. When retirees receive their pension money and make purchases in their community, it has a compounding effect that benefits everyone. When a retiree makes a significant purchase–such as a new washing machine–that business can order more to sell to customers and use the money to hire workers to facilitate the sales. The money the store owner and the employees receive further increases the reach of that initial pension investment.

The report calculated that pension spending supported 7.1 million American jobs and generated $1.5 trillion in total economic output nationwide. Each dollar paid out in benefits nearly tripped, resulting in 2.8 dollars in total economic output. 

Pensions are a great source of revenue for all levels of government, funding the vital public services we depend on, like schools, roads, and clean water. Defined benefit pensions generate $224.3 billion in valuable federal, state, and local tax revenue. 

These numbers are significantly higher than the last report and speak to public pension plans’ strength and increasing return on investment. In the 2023 Pensionomics report, $334.8 billion was paid to 11 million workers, generating $1.3 trillion in total economic output and $157.7 billion in federal, state, and local tax revenue.

According to NIRS data from 1993 to 2022, 58.9% of state and local pension funding comes from investment earnings, while 12% is from employee contributions. Thus, only 20% of pension benefits payouts came from the original employer contribution. 

This report welcomes news in an uncertain year as state legislators deliberate about pension benefits, restoring pensions where they have been removed, and expanding benefits. The data clearly shows that public pensions are an innovative and successful way to help build our economy and support our workers.
You can find state-specific information on how pensions have benefited your state here.