Public Pensions Drive $2.9 Trillion in Economic Output & $661.9 Billion in State & Local Revenues

_{The findings underscore the need for policymakers to evaluate the economic impact of public pensions holistically before considering reforms. Reducing benefits or closing pension plans may appear to save money in the short term, but the long-term costs could include reduced economic activity and public services, higher taxpayer burdens, and diminished retirement security for public servants.}

Media Contact: Lizzy Lees llees@ncpers.org

WASHINGTON, D.C. – A new report from the National Conference on Public Employee Retirement Systems (NCPERS) reveals that state and local public pensions are a powerful economic engine, generating over $660 billion in tax revenues and contributing nearly $3 trillion in economic output in 2023 alone.

The 2025 update of Unintended Consequences: How Scaling Back Public Pensions Puts Government Revenues at Risk provides a comprehensive, data-driven analysis of how public pensions support state and local economies through both investment of pension fund assets and retiree spending.

“Our research shows that public pensions are not a burden for taxpayers but instead are a revenue generator that should not be overlooked,” said Dr. Michael Kahn, NCPERS Director of Research and lead author of the study. “In 2023, public pensions produced $445.2 billion more in state and local revenues than taxpayers contributed.”

Key Findings from the Report:

• In 2023, public pensions contributed $2.9 trillion to the U.S. economy: $1.9 trillion from the investment of pension fund assets and $980.7 billion from retiree spending of pension checks.
• Public pensions generated $661.9 billion in state and local tax revenues—$445.2 billion more than the $216.7 billion contributed by taxpayers.
• Forty-three states saw a net revenue gain from public pensions, highlighting their widespread fiscal benefits. This trend has grown steadily since 2016.
• For every dollar taxpayers contributed to public pensions in 2023, they generated $13.41 in economic activity.

The findings underscore the need for policymakers to evaluate the economic impact of public pensions holistically before considering reforms. Reducing benefits or closing pension plans may appear to save money in the short term, but the long-term costs could include reduced economic activity and public services, higher taxpayer burdens, and diminished retirement security for public servants.

“Policymakers should take note: scaling back pensions could have unintended consequences. Instead, we should be strengthening these systems as long-term investments in our communities,” said Hank Kim, Executive Director and Counsel at NCPERS. “For every dollar taxpayers contributed in 2023, pensions generated $13.41 in economic activity. That's a return that benefits everyone.”

Download the full report here.

To learn more about the study's most notable findings and gain insights into the methodology, register for our July 15th webinar or watch on demand in the Center for Online Learning.

About NCPERS

Established in 1941, the National Conference on Public Employee Retirement Systems (NCPERS) is the largest trade association working on behalf of public sector retirement systems. Organized as a 501(c)(3) nonprofit organization with a diverse membership that includes 500 plans, plan sponsors, and stakeholders who collectively oversee approximately $6 trillion in retirement funds, NCPERS works to protect and expand pension access through essential education, innovative research, and unwavering advocacy. From the largest statewide systems to the smallest local funds, NCPERS members make possible the work to safeguard the retirement security of more than 20 million teachers, police, firefighters, and other public servants.