Public Pensions Plowed $179 Billion into State and Local Government Coffers in 2018, Study Shows

Positive Impact of Public Pensions Rose 30.6% from 2016, NCPERS Study Finds

Hank H. Kim, Esq., executive director and counsel of the National Conference on Public Employee Retirement Systems (Photo: Business Wire)

WASHINGTON--()--Public pension funds helped power the U.S. economy during 2018, generating $179.4 billion more in state and local government revenues than taxpayers put in, according to a biennial study by the National Conference on Public Employee Retirement Systems.

Public pensions’ positive financial impact rose 30.6 percent from the $137.3 billion level notched in 2016, according to the study, “Unintended Consequences: How Scaling Back Public Pensions Puts Government Revenues at Risk.” The 2020 edition of the study builds on NCPERS’ 2018 landmark analysis of how investment and spending connected to pension funds impact state and local economies and revenues.

The analysis of how investment and spending connected to pension funds impact state and local economies and revenues draws on historical data from public sources including the U.S. Census Bureau, Bureau of Economic Analysis, and Bureau of Labor Statistics. While pension fund assets are invested globally, the economic impact of these investments can be traced down to individual states based on the NCPERS study methodology.

“The positive economic effects of public pensions increased significantly over the course of two years,” said Michael Kahn, NCPERS’s research director and the study’s architect. “This means that if public pensions didn’t exist, policy makers would need to increase taxes on their constituents to sustain the current level of public services.” Kahn noted that the study also found that in 40 states, pensions were net contributors to revenue in 2018, an increase from 38 states in 2016.

The original Unintended Consequences study in 2018 broke ground by examining how state economies and tax revenues are affected when pension funds invest their assets and retirees spend their pension checks, and how taxpayer contributions compare to revenues, said Hank H. Kim, executive director and counsel of NCPERS.

“Decade after decade, public pension funds have worked by accumulating assets over a worker’s lifetime,” Kim said. “Steady contributions by employers and employees plus investment returns over the long haul have consistently produced results that provide career public servants with a modest but reliable income stream in retirement.”

“Pensions are the quintessential long-term investment, yet they are often cast as a pawn in political dramas over short-term spending,” Kim added. “This study underscores that breaking faith with public pensions is actually a costly strategy for state and local government. In the long-term, diminishing public pensions will backfire.”

NCPERS’s analysis of the data also showed:

  • The economy grows by $1,372 for each $1,000 of pension fund assets. While the figure sounds small on the surface, the size of pension fund assets—$4.3 trillion in 2018—means that the impact of this growth is greatly magnified, the study found.
  • Investment of public pension fund assets and spending of pension checks by retirees in their local communities contributed $1.7 trillion to the U.S. economy.
  • Economic growth attributable to public pensions in turn generated approximately $341.4 billion in state and local revenues. Adjusting this figure for taxpayer contribution $162 billion yields pensions’ net positive impact of $179.4 billion.


The National Conference on Public Employee Retirement Systems (NCPERS) is the largest trade association for public sector pension funds, representing more than 500 funds throughout the United States and Canada. It is a unique non-profit network of public trustees, administrators, public officials and investment professionals who collectively manage more than $4 trillion in pension assets. Founded in 1941, NCPERS is the principal trade association working to promote and protect pensions by focusing on advocacy, research and education including e-learning for the benefit of public sector pension stakeholders.


Debra Cope
(202) 468-3814

Release Summary

The positive impact that public pensions have on the U.S. economy grew 30%, to $179B, from 2016 to 2018, a new analysis of government data shows.


Debra Cope
(202) 468-3814