Reports about supersized public-sector golden parachutes and rhetoric about bloated public-sector pensions get abundant attention at the Capitol these days. The pension facts in a new report by the National Institute on Retirement Security warrant a look as well. They blow the myth of cushy retirement payouts to public employees at taxpayer expense.
The average Minnesota public employee pension in 2009, the most recent year covered in the report, was $20,633 per year. That's hardly lavish. About 17 percent of the funding for those pensions between 1993 and 2009 came from "employers," meaning taxpayers. Fourteen percent came from the employees themselves. The remainder, 68.5 percent, was derived from pension fund investment income.
The report also describes the economic impact of the $3.4 billion in total pensions paid to state and local government retirees in 2009. Those retirees spent $2.5 billion of that sum in Minnesota. That spending in turn generated an additional $3.2 billion in indirect and induced economic benefits for the state, supporting a total of more than 40,000 jobs.
That points to something that's often discounted in discussions about the adequacy of retiree incomes in years to come. What's at stake is more than the survival and comfort of retirees themselves. Their spending power affects the rest of the economy, and will play an ever-larger role in the nation's overall prosperity as the big baby boomer generation retires.