Mandatory Social Security Update

The financial uncertainty of the Social Security program has been and will continue to be debated until a feasible solution is established. Mandatory Social Security participation for future employees of state and local government is one reform that continues to be contested as a solution.

The Teachers’ Retirement System of the State of Illinois has updated its analysis of the impact of mandatory Social Security coverage on public education and has concluded it would be devastating to Illinois public education. The first-year employer cost of covering newly hired educators would be $57.2 million. The cumulative additional cost would be $893.7 million within the first five years and $3.4 billion within the first 10 years.

The study also examined the cost to public employers if mandatory Social Security were already in effect. The annual cost was based on payroll data from all 15 noncoordinated systems and retirement funds. The additional cost to Illinois public employers for current employees would be $969.8 million. Public employees would also be paying 6.2 percent if Social Security were already in effect.

Mandatory Social Security coverage for all state and local government employees would be devastating to state and local budgets. Illinois public pensions have remained outside the Social Security system for decades and have developed plans that are tailored to the occupational needs of their participants. Mandating participation into the Social Security system would not only jeopardize the integrity of the existing pension plans, but also create uncertainty as to the benefit levels for future members.

To read the cost study, click here.

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