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 the1980s 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.

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.

While the need for additional revenue is the primary reason for bringing all public employees into Social Security, proponents make two additional arguments. First, 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.

A second, more recent, argument contends that public pension plans are unstable, and Social Security coverage would provide public employees with retirement income if their pension plan went bankrupt.

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. They argue further that the overwhelming majority of public pensions are on sound financial footing, and rumors about plans going bankrupt are not supported by the facts.

Opponents also note that any influx of funding to the Social Security Trust Fund would have a negligible and temporary impact on the Fund’s long-term solvency. Moreover, Congress already fully addressed concerns about people receiving benefits without paying in their fair share. The Social Security benefits of people who also receive a pension from non-Social Security covered employment are significantly reduced.

CONGRESSIONAL ACTION

Senators Mark Warner (D-VA) and Saxby Chambliss (R-GA) are preparing to introduce legislation that will implement the recommendations of the Deficit Commission. Among those recommendations is a proposal to bring all newly hired public employees into Social Security. Specific details of the Warner legislation are still being developed at this time.