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IAFF LEGISLATIVE FACT SHEET                                   Click Here for Key Points

MANDATORY SOCIAL SECURITY COVERAGE

The IAFF opposes mandatory Social Security coverage for non-covered public sector employees.

BACKGROUND

When the Social Security system was created in 1935, government employees were expressly excluded. Even when state and local governments were given the option to join the system in the 1950s, many fire departments were still legally barred from electing Social Security coverage until 1994. Because of this long exclusion from the Social Security system, local governments created pension systems for fire fighters to address their retirement needs without Social Security.

An estimated 70 percent of all fire fighters are covered by pension plans that are independent of Social Security. These comprehensive plans are tailored to meet the unique needs of fire fighters by taking into consideration the early retirement ages and high rates of disability retirement that are characteristic of public safety occupations.

Throughout the 1980s and 90s, Congress considered various proposals to bring all public sector workers into the Social Security system, but decided each time to maintain the current practice of allowing public employees the option to join Social Security or retain their separate pension systems.  In 1990, Congress did make one significant change when it voted to mandate Social Security coverage for those public employees who are not enrolled in a pension system that provides benefits at least as generous as Social Security benefits.

Recently, the issue has been resurrected as a way to generate additional revenue for the Social Security Trust Fund. In 2010, two separate national commissions on reducing the deficit included identical proposals in their recommendations to bring all newly hired public employees into Social Security beginning in the year 2020.  In 2013, the Business Roundtable also called for mandatory coverage as part of a five point plan to improve Social Security finances.

Supporters of mandatory coverage make two arguments.  First, they claim that excluding some public employees harms the solvency of the Social Security Trust Fund.  Second, they contend that most non-covered public employees qualify for Social Security benefits, either from a second job or a spouse.  They argue that workers who receive Social Security benefits should be required to pay into the system throughout their career.

Opponents of mandatory coverage reply that any improvements to the Trust Fund would be minimal.  Current estimates suggest that mandatory coverage would extend the solvency of the Trust Fund by only two to three years.   Moreover, opponents argue that current law already addresses concerns about people receiving benefits without paying in their fair share by reducing the benefits of those who receive a pension from non-Social Security covered employment.

More importantly, opponents of mandatory coverage believe that forcing all public employees into Social Security—even if it is only new hires—would undermine existing pension systems that provide superior benefits and reflect the unique circumstances of public safety work. Since many states and localities would be unable to afford to maintain their current system and also pay into Social Security, mandatory coverage would jeopardize retirement systems that enable fire fighters to retire before age 67 or retire due to an injury.

CONGRESSIONAL ACTION

Many Congressional Republicans are urging that comprehensive Social Security reform be included in any deficit reduction plan, while a Democratic Senate leader, Sen. Dick Durbin (D-IL), has called for creating a commission to examine changes to Social Security.


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