Illinois retirees’ pension checks boost Illinois economy
A new study from the National Institute on Retirement Security reports the economic impacts of expenditures by retirees in public and private pension plans supported more than 127,000 jobs in Illinois as well as local and state tax revenue and spending that boosts all industries.
Pensionomics 2012: Measuring the Economic Impact of Defined Benefit Pension Expenditures finds pension benefits accounted for $18.9 billion in total economic output and $11.0 billion in value added in Illinois. The study says those 127,000 jobs represents 1.9 percentage points in the state labor force or $6.3 billion in income, a significant point in Illinois’ unemployment rate.
The study used contributions, earnings, and expenditure figures for 2009, using data from the US Census Bureau.
Illinois retirees use their secure monthly pension income to spend on food, housing, medicine, and all types of goods and services, providing a stabilizing role in the recent economic downturn.
Did all retirees spend that consistently? NIRS ececutive director Diane Oakley says retirees using 401(k) plan funds experienced big losses to their nest eggs, spending less than their pension-funded peers just when the economy needed more spending.
The study shows that each taxpayer dollar invested in public pensions in Illinois yielded $5.36 in total economic activity, and each dollar paid out in benefits resulted in $1.72 in economic activity. It also revealed that expenditures from Illinois public pension benefits in 2009 paid $11.0 billion in benefits to 402,312 retirees and beneficiaries.