While a defined benefit pension plan’s main goal is to provide steady income for retirees, in doing so they also provide substantial benefits to local, state and national economies, according to a report by U.S.-based National Institute on Retirement Security.

In 2016, retired Americans received US$578 billion in pension benefits with $294.7 billion paid to retired state and local government employees and beneficiaries, $83 billion to federal government retirees and beneficiaries and $200.3 billion to private sector retirees and beneficiaries.

Read: Canadian taxpayers bearing risk of public DB pension plans: report

The study found that spending by those retirees and beneficiaries supported 7.5 million American jobs that paid nearly $386.7 billion in labour income. It resulted in $1.2 trillion in economic output nationwide and added $685 billion in additional gross domestic product.

The expenditures also accounted for $202.6 billion in federal, state and local tax revenue. The study found each dollar paid out in pensions supported $2.13 in national economic output.

Notably, spending by pension recipients affects certain sectors more than others, the report noted. In the U.S., the most affected sectors are real estate, food service, health care and wholesale and retail trade. In 2016, pensioners’ spending positively shaped 417,773 jobs in the real estate industry, 560,480 jobs in restaurants and more than 700,000 health-care jobs.

Read: How plan sponsors can blend DB features into their DC pension plans

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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