By National Conference on Public Employee Retirement Systems

When budgets tighten and the economy falters, some states and localities have reacted to worries about pension funding ratios and unfunded liabilities by increasing employee contributions and cutting benefits. Some have even closed pension plans to new hires. Yet public pensions have a strong record of delivering retirement security efficiently: NCPERS’ 2025 update of its landmark economic impact study finds that public pensions generated
$2.9 trillion in economic output and $661.9 billion in state and local tax revenues in 2023 alone, $445.2 billion more than taxpayers contributed.1 Still, questions about fiscal sustainability loom and efforts to dismantle public pensions persist.2 The fundamental error that critics make is to compare 30-year pension liabilities with one-year state and local revenues, and then argue that public pensions are unsustainable. Comparing 30-year pension liabilities to one-year state and local revenues is like a bank telling its borrower that their 30-year mortgage affordability will be determined on the borrower’s one-year income, rather than their expected income over the life of the mortgage. Were that the case, almost no one would be able to buy a house. Just as a 30-year mortgage should be gauged against 30-year income, 30-year pension liabilities must be assessed against 30-year economic capacity.

Get the report here