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Consideration is underway
in Congress to expand mandatory membership in the Social Security system
to public employees not currently covered. The strategy is one of several
approaches to stabilizing the funding of the Social Security trust fund.
Last month, the House Committee on Ways and Means, Subcommittee on Social
Security, held another in a series of hearings on solving Social Security's
ills. This time, public sector representatives, including the nation's
fire fighters' union, weighed in strongly opposed to being part of a cure.
Alfred K. Whitehead, General President of the International Association
of Fire Fighters (IAFF), AFL-CIO, told the committee, "The IAFF is adamantly
opposed to the mandatory coverage of those public employees who are not
currently part of the Social Security system. Mandatory coverage would
wreak havoc with the economic security of fire fighters who are currently
not covered by Social Security, and would only produce a short term cosmetic
benefit to the Social Security system."
Whitehead observed that when Social Security was created, government
employees were expressly excluded. In response to this arrangement, state
and local governments developed their own retirement plans, which have
proven extremely successful. Whitehead pointed out, "Fire fighters retire
at much earlier ages than the general population _ well before eligibility
for Social Security benefits. In many cases, fire fighters are legally
required to retire at a given age, and therefore do not even have the option
of working until age 62 [the required age to receive minimum benefits]."
Additionally, in years past fire fighters have foregone wage increases
to create improvements in their pension plans, Whitehead emphasized. The
union leader noted that a fire fighter earning $32,500 a year would pay
a tax of over $2,000 if Social Security participation was mandated. Employers
would pay a matching amount.
Mandatory coverage would impose an |
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enormous financial burden on the
public safety agencies that employ fire fighters. The increased cost will
necessarily result in either reduced services or increased local taxes
or both, Whitehead argued.
Robert T. Scully, representing the National Association of Police Organizations,
told the panel that mandating Social Security would have a "dramatic and
negative impact on the recruitment and retention of well-qualified public
safety officers." Scully expressed concern that placing officers and fire
fighters under the Social Security tax would pressure government employers
to make up the increased cost by altering pension plans or furloughing
workers, thereby reducing the number of public safety personnel.
Other public sector representatives told the congressional committee
of the problems that would arise should public employees be placed in the
federally controlled retirement system.
Currently, only 24 percent of state and local public safety personnel
pay Social Security taxes and are covered by the system. California, Ohio,
Texas, Massachusetts, Illinois, Colorado, and Louisiana account for 75
percent of the non-covered public employees. Inclusion of these personnel
in the system would reduce the Social Security shortfall by only 10 percent,
according to a study by the General Accounting Office.
The National Commission on Retirement Policy, which recommended the
proposed changes in the program, has also suggested that the minimum eligibility
age be moved to 70 for individuals born after 1969 and to 65 for those
born after 1952.
The Social Security Act was passed in 1935. In 1950, Congress altered
the law to allow certain public employees to participate in the plan. In
1983, Congress legislated that public employees then participating in the
system could not withdraw and mandated participation in Medicare. By 1991,
all public sector employees who were not covered by a retirement plan were
required to pay Social Security tax and join the plan. |
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