PASADENA, Calif., Dec. 12, 2022 (GLOBE NEWSWIRE) — The Los Angeles County Retired Association (LACERA) provides pensions to 73,385 retirees nationwide, with more than 60,000 residing in California and more than 42,000 in Los Angeles County. . The benefits that retirees receive are spread throughout the economy and affect different industries and sectors of work. In 2021, these retirees will generate a combined economic output of $2.7 billion and support thousands of jobs in Los Angeles County, according to a report just released Beacon Economics entitled “Economic, Fiscal and Social Impacts of LACERA Retirees.”
With retirement security becoming a pressing national issue, a report commissioned by LACERA found that defined benefit plans like those offered by LACERA are more efficient, safer and provide more value than defined contribution plans like is 401(k)s, in providing a sustainable retirement. Pooled assets of a defined benefit plan offer superior financial protection compared to defined contribution plans by eliminating longevity risk, providing inflation protection and providing death benefits while providing a secure and stable income to beneficiaries. The United States Census Bureau found that between 2011 and 2021, among the nation’s rapidly aging population, the number of those 65 and older increased by 31 percent.
Other key findings of the report include the following:
Most LACERA retirees live in Los Angeles County
A consistent and stable income stream not only benefits retirees, but also positively impacts the communities in which retirees reside. The Beacon Economics report found that approximately 42,300 LACERA retirees reside in Los Angeles County, with the majority of retirees residing in District 5 (25 percent), followed by District 4 (21.8 percent), District 1 (21.6 percent) and District 2 (21.0 percent). . Pensions paid to these retirees in 2021 totaled more than $2.3 billion.
The stable income of LACERA retirees has resulted in increased economic activity in Los Angeles County
Pension benefits have resulted in several levels of positive economic activity, from direct effects through the spending of pensioners’ money to indirect effects, induced effects and social effects. For example, if a retiree spent money at a restaurant (direct influence), the restaurant would restock (indirect influence), and the restaurant employee would use his salary to buy groceries (induced influence). In addition, the retiree receives a constant and guaranteed income that allows him to continue spending and provides a constant income in the community even in times of economic crisis (social impact).
Impacts by sector: first 4
A Beacon Economics report quantified the direct economic impact of LACERA retiree spending in Los Angeles County across several categories and found that it generated more than $1.2 billion in direct economic activity. The report showed that spending on housing and real estate was $713.3 million; finance, banking and insurance contributed $316.8 million; retail sales added $10.9 million; and leisure and hospitality generated $96.1 million.
A secondary impact of spending by LACERA retirees in Los Angeles County is also significant. A Beacon Economics report showed that $487.3 million, or more than 59 percent of total secondary economic output, was generated by spending by LACERA retirees across four sector categories. These categories include the housing and real estate sector, which recorded $86.3 million in total secondary impact; finance, banking and insurance, $357.9 million in secondary impact; retail sales, a $12.5 million secondary effect; and leisure and hospitality, a $20.7 million secondary impact.
Spending by LACERA retirees has had a positive effect across the country
Statewide, retirees residing in Los Angeles County have generated significant economic activity. A total of more than $2.9 billion in economic activity was produced across the country as a result of the retirement benefits provided to these retirees by LACERA. This activity included more than 24,000 jobs and more than $900 million in labor income.
$339.7 million in tax revenue generated
On the fiscal front, LACERA retirees billed $154.3 million in state and local taxes and an additional $185.3 million in federal taxes. In Los Angeles County, the fiscal impact of state and local taxes was spread across all five supervisorial districts, with each district showing a fiscal impact of at least $23 million. Whether it’s property tax, sales tax or income tax, these tax payments support local schools, parks, roads, public safety and other services that enrich the Los Angeles County community.
Positive social impact
The social effects of LACERA retiree spending are widespread. As noted above, a consistent fixed monthly income helps strengthen local economies during economic downturns by stimulating economic growth and providing secondary effects that support jobs. Additionally, this income allows retirees to volunteer in the community instead of seeking employment to pay their bills. In the United States, it is estimated that people over the age of 65 volunteer 94 hours a year in their communities.
Positive, ongoing impact for LACERA retirees and their community
Beacon Economics’ findings clearly show how the economic, fiscal and social impacts of LACERA retirees in Los Angeles County and across the country have benefited taxpayers, employees and employers. The report quantifies that LACERA pension spending generated billions of dollars in economic activity and created significant jobs. LACERA has provided lifetime financial security for tens of thousands of members, empowering them to make a positive impact in their local communities, and providing the reassurance needed to continue doing so regardless of the current economic climate.
A link to Beacon Economics’ December 9 presentation to the LACERA Board of Trustees can be found here.
About the company LACERA
LACERA is a public pension plan created and operated under the County Employees Retirement Act of 1937 (CERL) and is subject to the California Constitution, CERL, and the Public Employees Pension Reform Act of 2013 (PEPRA). Two panels are controlled by LACERA. Both committees consist of elected and appointed members and one ex-officio member. The Retirement Committee is responsible for the overall administration of the retirement system and retiree health benefits program administered by LACERA. The Investment Committee is responsible for establishing LACERA’s investment policies, strategies and objectives and for exercising authority and oversight over the management of the Fund’s investments and actuarial matters relating to the determination of contributions and the assessment of the Fund’s liabilities.
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