March 16, 2011

New Research Highlights Value of Pension Investments for Communities

Pensions invest over $20 billion; 161,000 jobs-years created from 1995-2010

Zoe Bridges-Curry
(202) 822-2127 x122

Washington, D.C. – As state and municipal governments seek to address serious budget challenges, pension critics are advancing misdirected proposals to cut or eliminate defined benefit retirement plans. Countering the critics’ claims that pensions impose only costs, American Rights at Work Education Fund today releases new data demonstrating how private and public pension funds help drive the economies of communities through investments that, in addition to producing solid returns, create good jobs.

The brief, “Creating Good Jobs for Our Communities: Pension Dollars at Work,” is available here.

The paper analyzes a sample of construction funds and real estate trusts over 15 years. From 1995 to 2010, private Taft-Hartley and public pension funds put more than $20 billion into funds and trusts that invested in projects that created approximately 161,083 good jobs. These jobs were created as a collateral benefit of median aggregate returns that outperformed appropriate benchmark indexes. Taft-Hartley pensions are funds that are jointly controlled by employers and unions.

While just a very small fraction of total pension fund assets, the investments highlighted in this brief demonstrate the potential for employees, through their unions, to more fully harness the power of pensions, for their own benefit and for the good of their communities.

“In projects from coast to coast, we are seeing workers’ pensions make needed investments in areas hard hit by the recession,” says Michael Wasser, author of the brief. “And the jobs they create allow workers in construction, an industry that bore the brunt of the Great Recession’s impact, to get back to work.” At a time when federal, state, and local governments are unwilling to fund projects that would put people to work and stimulate the economy, defined benefit pension plans could provide the necessary capital to recharge our local economies.

Further, pensions serve as a dynamic vehicle for ensuring workers enjoy a meaningful retirement, while also powering economies through large scale investments in capital markets. Missing from the debate around state and local pension funds is the role pensions play in stimulating local economies through investments that can create much needed jobs for our communities across the country.

The brief is authored by Michael Wasser, Research and Communications Associate of American Rights at Work.

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