HORRIBLE: Detroit Firefighters, Cops Ineligible for Social Security
If their pensions are cut, thousands of city of Detroit retirees won’t have anything to fall back on other than their own savings, the support of their families or charity. That’s because the city’s firefighters and police aren’t eligible to receive Social Security benefits.
When Social Security was first instituted, the plan didn’t cover any worker with a public pension. States can opt in, and Michigan has, but each city, county, township, school board or other local government entity also has to join. Existing public pension funds can continue to operate out from under Social Security, and with generous government pensions, many workers felt they were getting a better deal from their own pension fund than they’d ever get from Uncle Sam. Instead, the contributions the employer and worker would have made to Social Security benefits went to their pension funds.
As cities, counties and states have phased out pensions that pay a guaranteed benefit in favor of plans where workers and the employer contribute to a defined contribution plan similar to a workplace 401(k) account, most government workers not covered by a public pension or a special exemption have been required to contribute to Social Security. Since Detroit’s firefighters and police officers still had a public pension plan, they continued to avoid Social Security payments.
Of the nearly 21,000 city retirees now collecting pensions, 9,017 retired police officers, firefighters or their surviving spouses don’t get Social Security, or about 44 percent of all city pensioners.
Workers who spend part of their careers working in the private sector and part under a public pension also take a hit to their Social Security payments when they retire. The amount of their public pension offsets their part of their Social Security benefits, reducing their monthly payments.
From The Detroit News: detroitnews.com