Pension spending accounted for 1.3 trillion in total economic output and supported almost 6.8 million jobs in the United States in 2020. That’s according to a new report from the National Institute on Retirement Security. 

The largest employment effects occurred in the healthcare, food services and retail trade sectors.

“During this [pandemic] time, pension income was crucial for millions of Americans. Retirees with pensions knew that their retirement income was stable and secure, despite severe economic instability,” NIRS executive director and report co-author Dan Doonan stated. “Pensioners could continue spending at normal rates, which supported millions of jobs across the nation during a time of massive layoffs. In contrast, many retirees relying on individual savings in 401(k) accounts during the height of the pandemic were fearful to spend their savings, which is detrimental to the economy.”

Pension spending, he added, also generated substantial tax revenue by taxes paid on pension benefits as well as other taxes, such as sales taxes on retail purchases. 

“Pensions remained a stable source of revenue for governments, which were starved for revenue in the early days of the pandemic,” Doonan said.

According to the study, in 2020, $612.6 billion in pension benefits were paid to 24.6 million retired Americans. Pension spending collectively generated $1.3 trillion in total economic output, supporting almost 6.8 million jobs across the country. Pension spending also added almost $157.7 billion to government coffers at the federal, state and local levels. 

NIRS will host a webinar Jan. 11 at 2 p.m. ET to review the national economic effects of US pension plans as well as the effects of state and local plans on a state-by-state basis.

“The impact of pensions goes so much deeper than providing financial security to retirees, which we saw in real-time during the global pandemic. In 2020, the US and global economies suffered unprecedented, abrupt and deeply devastating impacts with the COVID-19 outbreak,” Doonan said.