Study Finds Public Pensions are a Boon to California Economy
There is no debate about the impact secure retirement benefits have on the well-being of public employees and their families, including those of California’s first responders.
Well, it turns out these benefits also make for a stronger California economy … to the tune of $21 billion a year.
That’s the striking conclusion of a comprehensive new report issued this week by CalPERS. The study, conducted by the non-partisan Applied Research Center at Cal State University Sacramento, found that the $13.7 billion in annual payments from CalPERS and CalSTRS generate an additional $7 billion a year in economic impact … more than the forestry and fishing industries combined.
The total economic effect of CalPERS and CalSTRS benefits -- $21 billion – creates 139,000 jobs with an annual payroll of $4.8 billion.
This impact is particularly good for local economies and local government. According to the study, every $1 invested by employers in pension funds produces $8.55 in benefits to the economy. More than half of that $1 investment (56 cents) actually comes directly back to government in state and local tax revenue. In Los Angeles County alone, CalPERS benefit payments produce more than $100 million in direct tax revenue.
In short, retirement security is good for California, as well as for its retirees.
“This is a powerful answer to those who would blame our hard-won retirement security for California’s ills,” said CPF President Lou Paulson. “Taking secure pensions away from public employees would not only be an unfair attack on public servants, it would also blow a hole in our state’s economy.”
Because the study only covers CalPERS and CalSTRS (the state teacher's retirement system), it actually understates the economic impact of retiree pensions, since local county pension funds are not included in the calculation. It also does not account for more than $15 billion CalPERS' massive pension fund directly invests in the California economy.
"This report makes it clear: Instead of taking retirement security away from some Californians, we should be focusing on expanding retirement security to all Californians," concluded Paulson.
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