The Importance of Public Pension Benefits

Public pension benefits are crucial for state and local government retirees, with several key aspects: 

Funding Source: 

• Paid from trust funds, not general revenues 

• Funded through employee and employer contributions, as well as investment earnings

Benefit Amount: 

• Approximately 11 million beneficiaries nationally 

• Average annual benefit of about $27,000 

• Many retirees don't receive Social Security

Economic Impact: 

• Boosts local economies through spending 

• Supports 7.5 million American jobs and $1.2 trillion in economic output annually 

• Particularly vital for small or rural communities 

Key Points: 

• Trust funds are invested to generate returns 

• Employee contributions account for 11% of fund receipts 

• Employer contributions make up 25% of receipts 

• Pension spending varies widely among states and municipalities

Lessons Learned 

Public pensions provide significant value to workers, retirees, and taxpayers. They are funded primarily through investment earnings and employee contributions, with employer contributions accounting for a smaller portion. The economic impact of pension spending is substantial, supporting local economies across the country. However, funding levels vary, and policymakers need tools to manage risks and uncertainties in volatile financial markets.