PASADENA, California, Dec. 12, 2022 (GLOBE NEWSWIRE) — The Los Angeles County Employee Retirement Association (LACERA) provides retirement benefits to 73,385 retirees statewide, of whom more than 60,000 live in California and more than 42,000 in Los Angeles County. The benefits these retirees receive affect the economy as a whole, impacting various industries and employment sectors. In 2021, these retirees generated $2.7 billion in combined economic output and supported thousands of jobs in Los Angeles County, according to a just-released report lighthouse economy entitled “Economic, Fiscal and Social Impacts of LACERA Pensioners”.
As pension security becomes an urgent national concern, the LACERA-commissioned report found that defined benefit plans such as those offered by LACERA are more efficient, more secure, and offer more value than defined contribution plans such as 401(k)s, to to be sustainable retirement savings. The pooled assets of a defined benefit plan offer superior financial protection compared to defined contribution plans because they eliminate longevity risk, provide inflation protection, and provide death benefits while providing beneficiaries with a secure and steady income. The United States Census Bureau found that the country’s rapidly aging population saw a 31 percent increase in those aged 65 and over from 2011 to 2021.
Other key findings from the report include:
Most LACERA retirees live in Los Angeles County
A consistent, steady stream of income not only benefits retirees, it also has a positive impact on the communities where retirees live. The Beacon Economics report found that approximately 42,300 LACERA retirees reside in Los Angeles County, with most retirees living in District 5 (25 percent), followed by District 4 (21.8 percent), District 1 (21.6 percent) and District 2 (21.0 percent). . The retirement benefits paid to these retirees in 2021 totaled more than $2.3 billion.
The steady income of LACERA retirees led to increased economic activity in Los Angeles County
Pension benefits generated multiple levels of positive economic activity, from direct impacts from retiree spending to indirect impacts, induced impacts, and societal impacts. For example, a retiree spending money at a restaurant (direct impact) would cause the restaurant to restock (indirect impact), and a restaurant employee would use their paycheck to purchase groceries (induced impact). In addition, the retiree receives a steady and guaranteed income that allows them to continue spending even during economic downturns (societal impacts) and generate a steady stream of income in the community.
Impact by Sector: Top 4
The Beacon Economics report quantified the direct economic impact of LACERA retiree spending in Los Angeles County across multiple categories and found that it generated more than $1.2 billion in direct economic activity. The report showed that housing and real estate spending was $713.3 million; Finance, banking and insurance contributed $316.8 million; retail added $10.9 million; and leisure and hospitality generated $96.1 million.
The secondary impact of LACERA retiree spending in Los Angeles County is also significant. The Beacon Economics report found that $487.3 million, or more than 59 percent of total secondary economic output, was generated from spending by LACERA retirees across four sector categories. These categories include the housing and real estate sector, which recorded a total of $86.3 million in secondary impact output; Finance, Banking & Insurance, $357.9 million in secondary impacts; Retail, $12.5 million in secondary impact output; and Leisure & Hospitality, $20.7 million in secondary impact output.
Spending by LACERA retirees had a positive impact across the country
On a statewide basis, retirees living in Los Angeles County generated significant economic activity. Overall, more than $2.9 billion in economic activity was generated nationwide as LACERA provided retirement benefits to these retirees. This activity has generated more than 24,000 jobs and earned over $900 million.
Generated $339.7 million in tax revenue
On the tax front, LACERA retirees accounted for $154.3 million in state and local taxes and an additional $185.3 million in federal taxes. In Los Angeles County, the tax impact of state and local taxes was spread across all five regulatory districts, with each district having a tax impact of at least $23 million. Whether it’s a 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 impact of LACERA pensioners’ spending is widespread. As mentioned above, the steady fixed monthly income helps boost the local economy during economic downturns by stimulating economic growth and having secondary effects that promote jobs. Additionally, this income allows retirees to volunteer in the community rather than seek employment to help 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.
A positive, lasting impact for LACERA retirees and their community
The Beacon Economics findings clearly illustrate how taxpayers, workers and employers have benefited from the economic, fiscal and social impact of LACERA retirees in Los Angeles County and across the state. The report quantifiably shows that LACERA’s pension spending has generated billions of dollars in economic activity and created significant jobs. LACERA has provided tens of thousands of members with lifetime financial security, enabling those members to make a positive impact on their local communities and providing the security needed to continue this activity regardless of the current economic climate.
A link to Beacon Economics’ December 9th presentation to LACERA Board Members is available here.
LACERA is a public retirement plan created and operated under the County Employees Retirement Law of 1937 (CERL) and governed by the California Constitution, CERL, and the Public Employees’ Pensions Reform Act of 2013 (PEPRA). LACERA is managed by two board members. Both bodies are composed of elected and appointed members and one ex-officio member. The Board of Retirement is responsible for the overall administration of the retirement system and the Retiree Healthcare Benefits Program administered by LACERA. The Board of Investments is responsible for determining LACERA’s investment policies, strategies and objectives and for exercising power and control over the Fund’s investment management and actuarial matters relating to the determination of contributions and the estimation of the Fund’s liabilities.
media contact: Eric W. Rose, [email protected] or 213-741-1500 ext. 525