This study analyzes the impact of defined benefit pensions, especially public pensions, on retirement income security and wealth distribution by race, gender, and educational attainment in the U.S. It serves as a companion report to Closing the Gap fact sheets, which are designed to inform the public about the social equity impact of pensions in each state and the District of Columbia. The fact sheets can be accessed at https://www.nirsonline.org/reports/ closingthegap/.
Based on analyses of U.S. Census Bureau and other data sources on income, retirement plans, and other household assets, this report finds that public pensions play an outsized role in the retirement income security of older adults and reduce wealth inequality by race and gender. Pension income provides a critical buffer against economic hardship in old age for all groups, especially Black and Latino seniors, seniors without college degrees, and women. Furthermore, the relatively even distribution of pension income and its wealth value helps to soften wealth inequality, providing a critical source of household wealth for older women and Black families. While policy debates about public pensions are often framed exclusively as financial liabilities, public pensions are also a critical form of wealth for workers and retirees. As private pension coverage declines, public sector retirement benefits form a bulwark of middle-class retirement security, particularly for marginalized communities who have been shut out of other wealth-building opportunities.
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