International Association of Fire Fighters

International Association of Fire Fighters
ALFRED K. WHITEHEAD, General President
VINCENT J. BOLLON, General Secretary-Treasurer
1750 NEW YORK AVENUE, N.W.
WASHINGTON, D.C. 20006-5395
(202) 737-8484
FAX (202) 737-8418

STATEMENT OF THE INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS ON REFORMING THE SOCIAL SECURITY SYSTEM

The International Association of Fire Fighters represents more than 225,000 professional fire fighters and emergency medical personnel across the nation. We are deeply committed to helping create a Social Security system that provides for the retirement security of all Americans. We firmly believe that people of diverse viewpoints can achieve a consensus on reforming Social Security in a way to assure the solvency of this vital program for generations to come.
We bring to this debate two very different vantage points. First, we represent tens of thousands of middle-income workers who have paid into the Social Security system for many years. These fire fighters and emergency medical personnel are counting on Social Security to provide a sizable piece of their retirement income. The safety and security of the system is vitally important to them and their families. Second, we represent thousands more workers who are not covered by Social Security, and instead solely pay into state and local government pensions that operate outside the Social Security system. We believe the integrity of the Social Security system must be maintained in a way that protects the retirement security of both of these groups.
For the group who are covered by Social Security, we believe the current basic structure of this worthwhile system must be maintained. For more than 60 years, Americans have benefited from this unique defined benefit system which guarantees workers and their dependents a lifetime annuity benefit. We believe proposals to privatize Social Security are misguided, and would wreak havoc with the retirement security of millions of Americans. We are well aware of the coming funding shortfall in the Social Security Trust Fund, but we firmly believe these funding issues can be addressed without sacrificing the basic premises of the existing system.
Two other proposals that have been offered are also troubling to America's fire fighters. We are particularly opposed to the notion of raising the retirement age. Because of the nature of their profession, most fire fighters retire at much earlier ages than most other workers. They already wait several years after their retirement from the fire service before becoming eligible for Social Security benefits. Increasing the length of this wait would be patently unfair to this dedicated group of American heroes. Moreover, the Labor Department and medical statistics show that the lifespan of fire fighters is significantly shorter than the general population. The years of demanding and traumatic physical work, stress and exposures take their toll, and lead to death at a younger age. For too many fire fighters, raising the retirement age would mean that they will never be able to collect benefits from a system that they paid into for many years.
The second proposal of concern is one shared by virtually all organizations representing working Americans. The 6.2% FICA tax is high enough already, and should not be increased. Middle income Americans simply should not be asked to shoulder any more of our nation's tax burden.
There are better ways to address the shortfall in the Trust Fund than dismantling the system, cutting benefits, or raising taxes on low and middle-income Americans. One option is to raise the payroll tax earnings cap. This regressive cap results in moderate and low income workers paying a higher percentage of their wages into the Social Security system than more affluent individuals. Raising the cap would be a fair way to generate additional revenue for the system.
Another option that we believe deserves serious consideration is allowing the Social Security trustees to invest a portion of the trust fund. Our experience with pension funds demonstrates that it is possible to abide by fiscally prudent investment principles and still realize significant returns. Having the Social Security trustees, rather than individual beneficiaries, invest the funds ensures that the risk is spread among a large pool of people so that no individual retiree need be adversely affected. Losses in a particular investment option or at a particular point in time are offset by gains in other investments and other times. We appreciate the concerns of those who fear investing retirement savings in the stock market, and we do not say that such investments should be undertaken lightly. Nevertheless, we believe that a conservative investment plan can add much needed revenue to the Trust Fund without appreciable risk to beneficiaries.
Universal Social Security Coverage
Equally important to protecting the retirement security of those workers who are included in Social Security is protecting the retirement security of those who are covered by state and local government pension plans that operate outside of the Social Security system. Due to their historic exclusion from Social Security, states and local governments were forced to establish separate pension plans that take into account the absence of Social Security benefits. Even when most public employees were allowed to join the system in the 195Os, thousands of fire departments were legally denied the option to join the system until 1994. As a result, more than 70% of the nation's public safety officers are not covered by Social Security, but are covered by state and local pension plans developed by their government employer. These public sector pension plans have been tailored to meet the unique needs of their employees. For example, plans covering public safety employees are crafted to account for the early retirement ages and high rates of disability common to fire fighting and law enforcement work.
Mandating Social Security coverage of public sector employees would force local governments to either abandon their specialized plans in favor of Social Security or retain their existing systems in addition to Social Security. Both options are untenable. Abandoning existing systems would jeopardize the retirement security of fire fighters who retire far too early to receive Social Security benefits. It could also threaten the health and safety of fire fighters who are forced to remain the on job after sustaining a serious injury since they would no longer have access to the disability pensions that take into account the unique physical demands of their job.
Retaining existing systems in addition to Social Security would cause even more disruption. It would result in a 6.2% pay cut for fire fighters and a 6.2% cut in fire department budgets. In addition to the fundamental unfairness of salvaging the Social Security trust fund on the backs of the public sector, imposing costs of this magnitude would also have severe consequences for the security and safety of fire fighters. Many fire departments are already struggling to comply with minimum health and safety requirements. This added burden could force them to reduce spending on equipment and training that is necessary to protect fire fighters' lives.
Neither option is feasible. States and localities must be allowed to maintain their unique retirement systems. For America's fire fighters, mandatory Social Security coverage is simply unacceptable as an option to salvage the Social Security Trust Fund.