The Link Between Social Security Privatization and Attacks on Public Education Pension Plans
NEA members' retirement security is under attack from many directions. President Bush recently announced his plans to privatize Social Security, which would have serious consequences for our economy and undermine retirement security.
Privatization of Social Security would contribute $2 trillion to our national budget deficit, could eventually lead to lower returns on private investments and higher interest rates paid by the federal government, and would cut benefits for the elderly, as well as eliminating benefits for the disabled and some spouses and children. The purpose of Social Security is to ensure basic income without risk to the individual. No private account can achieve that goal.
Efforts to dismantle Social Security echo the attacks on public employee defined benefit pension plans. Like Social Security, these plans provide a guaranteed benefit for life that can never be taken away, and also like Social Security, their continuation is at grave risk around the country. Just a few months ago, President Bush made it clear that he understands the connection when he declared, "…And the question is whether or not our society has got the will necessary to adjust from a defined benefit plan to a defined contribution plan."
And as state legislatures have opened their sessions, one proposal has emerged after another -- from South Carolina to Alaska --- to move public education employees from secure defined benefit pension systems to risky defined contribution plans.
The list below will help you be on guard for attacks in your state. Join the fight to save Social Security and help protect the retirement security of public employees, including teachers and education support professionals, in other states.
Among the states considering action are:
- Alaska: A legislative work group is studying switching public employees to defined contribution plans.
- California: Considered by many to be the center of the fight to preserve public employee pension plans, Governor Schwarzenegger is pushing hard to convert public employee pension plans to defined contribution retirement plans. If he does not win a legislative victory, he may take the issue to the voters through a ballot initiative.
- Georgia: Legislators are investigating the possibility of starting a defined contribution plan.
- Kansas: The relevant legislative committee has recommended an optional hybrid plan with a low 1.5 percent defined benefit formula with an optional defined contribution component.
- Maryland: A defined contribution retirement bill has been introduced in the state legislature. This follows last year's proposal from Gov. Robert Ehrlich to shift the cost of teacher pensions to local governments from state government, which could force education employees into defined contribution plans.
- Minnesota: Legislators are reported likely to introduce a defined contribution bill this year, although it is considered unlikely to become law.
- New Mexico: The Legislature has endorsed a proposal that would require the $7.3 billion Educational Retirement Association to do a study on changing the system to a defined contribution plan.
- South Carolina: Gov. Mark Sanford announced in his state of the state address that he will introduce legislation to form a mandatory defined contribution plan for public employees.
- Virginia: A legislator introduced a bill to authorize a study on adding a new defined contribution plan for public employees.
- While no steps have been taken, New York City Mayor Michael Bloomberg, in testimony before the New York Legislature early last year, said a study by the conservative think tank the Manhattan Institute, which proposed switching public employees to a defined contribution plan, was "worth considering." The media has recently carried stories about the costly public employees' pension plans.
I need more information:
- Protect Social Security Benefits
- NEA's Position on Social Security Privatization
- Social Security: Cornerstone of Societal Safety Net
- Privatization: A Bad Deal for Younger Americans
- Privatization: A Bad Deal for Public Employees
- Privatization: A Bad Deal for African Americans
- Privatization: A Bad Deal for Hispanic Communities
- Privatization: A Bad Deal for Women
- Other Resources