Many assume that mandatory coverage will improve the retirement security for millions of public workers.


Mandatory coverage will undermine retirement security for millions of public workers – including a majority of police officers and firefighters and nearly half of the Nation’s teachers.

State and local pension systems, as contrasted with Social Security, are pre-funded defined benefit programs that guarantee retirement security for their members.  These plans provide disability benefits (including critical protection for public safety officers), death benefits, options that protect spouses and dependent children, and often cost-of-living adjustments.

To respond to mandatory Social Security coverage, State and local government employers would need to decide how to finance the increased payroll taxes through tax increases, cuts in existing benefits and/or reductions in workforce or public services. Mandatory coverage would most likely result in separate or restructured tiers for new hires.  Although it would be possible, it’s unlikely the new tiers, including the addition of Social Security, would provide nearly the protection provided by the current plans.  In addition, the existing plans would experience a reduction in employee and employer contributions which are an essential part of their long-term actuarial funding plan.

Investment income is essential to providing retirement security. National studies show that investment income funds up to 70% of the average retirement benefit.  The loss of contributions from employees and employers which would be diverted to Social Security, together with the loss of investment income on those funds, would be catastrophic over time.  These losses would ultimately destabilize public plans and would likely result in reduced benefits for current members and retirees as well.

Millions of public employees in non-covered systems have placed their faith and their future in their pension plans.  It is absolutely critical to maintain the stability, confidence, security, and trust of those public employees.

Improve the retirement security for millions of public workers.

Reduce the
cost of keeping current pension promises.

Improve state
and local government finances.

Enhance the benefits provided to the public sector workforce.