Thursday, July 14, 2011

What else do defined-benefit pension plans do for many Americans?

Diane Oakley, the Executive Director of the National Institute on Retirement Security (NIRS), states in her testimony to the U.S. Senate Committee on Health, Education, Labor and Pensions (July 12, 2011) that defined-benefit pension plans ensure self-support and independence for middle-class Americans in retirement “while simultaneously fueling the economy, providing capital to the financial markets, and reducing government expenditures… Pensions can deliver the same level of retirement income as an individual 401(k) type savings account at half the cost” as a result of their professional asset management and better long-term investment strategies, particularly during challenging economic times. Her data include the effects of defined-benefit pension plans on local, state, and federal economies and on retirees’ self-sufficiency.

NIRS estimated that public and private sector pension plans in 2009
* provided a total economic impact of $756 billion;
* supported more than 5.3 million American jobs;
* contributed more than $121.5 billion in annual local, state, and federal revenue.

NIRS calculated that benefits in 2006 supported economic activity which
* had a total economic impact of more than $358 billion;
* supported more than 2.5 million American jobs that paid more than $92 billion in total compensation to American workers;
* contributed more than $57 billion in local, state, and federal tax revenue.

NIRS assessed that pension income received by nearly half of older American households in 2006 was associated with
* 1.72 million fewer underprivileged households and 2.97 million fewer nearly-poor households
* 560,000 fewer households experiencing a food privation
* 380,000 fewer households experiencing a shelter adversity
* 320,000 fewer households experiencing a health care hardship.

In light of today’s economic problems, defined-benefit pension plans provide a bastion of hope and financial stability for the American people.

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