Pension Benefits Boost the Texas Economy

More than 700,000 Texas retirees receive $16.9 billion in benefits each year from state and local pension plans — and use that money to help drive the state’s economy, according to the National Institute on Retirement Security’s Pensionomics Report.

As the Texas Legislature weighs proposals to fully fund the Employees Retirement System next year and into the future, they should recognize the economic impact of making ERS actuarily sound.

“Pension benefits received by retirees are spent in the local community,” the report explains. “This spending ripples through the economy, as one person’s spending becomes another person’s income, creating a multiplier effect.”

The pension dollars go to retired teachers as well as former essential state workers in law enforcement, health care, and other areas who spent their careers making Texas safer, healthier, and stronger.

Each dollar paid out in pension benefits supported $1.83 in total economic activity in 2018 in Texas, the report found. Spending derived from state and local pensions supported:

• More than 175,000 jobs that paid $9.5 billion in wages and salaries,

• $31 billion in total economic output,

• $4 billion in federal, state, and local tax revenues in the state of Texas.

Just as important, every dollar that taxpayers contributed to Texas’s state and local pension plans over the past 30 years ultimately supported $9.19 in total output in the state. That’s because taxpayer contributions are a seed for retirement benefits, multiplied over time by investment earnings and employee contributions.

By fully funding ERS in the upcoming state budget, lawmakers would not only be keeping their promise to retires and sparing future taxpayers from footing the bill, they would also be contributing to a robust Texas economy.