In general, coverage for positions under a retirement system was not possible until
January 1, 1955. Special Federal legislation did permit retirement system coverage
for employees in positions under the Wisconsin Retirement Fund, employees in positions
under the Arizona Teacher Retirement System, and employees in certain Utah educational
There was also another method by which some State and local subdivisions obtained
Social Security coverage for their retirement system employees prior to 1955. In the
early 1950's, shortly after the enactment of Section 218 and prior to the enactment
of the 1954 amendments, various State and local government entities were interested
in obtaining Social Security coverage for employees covered by existing retirement
systems despite the provisions of 218(d) which did not permit such coverage. SSA was
soon faced with proposals for liquidating retirement systems in order to circumvent
Section 218(d) and then make Social Security coverage possible for those employees
formerly under the liquidated systems.
The matter was presented to the Commissioner of Social Security, and in January 1951
the Commissioner established the Administration's policy that if a State or political
subdivision had fully liquidated its retirement system and provision had been legally
made for the settlement of previously accrued rights by means of refund of contributions,
purchase of annuities, or statutory segregation of accumulated equities then SSA would
consider the State or political subdivision to no longer have a retirement system.
The former retirement system employees would then be eligible for Social Security
coverage as an absolute coverage group via a Section 218 Agreement.
Once Social Security coverage had been obtained, the State or political subdivision
could then establish a new retirement system as a supplement to Social Security without
any effect on the Social Security coverage already afforded by the Section 218 Agreement.
The process was approved by the Comptroller General of the United States in Opinion
B-107602 dated January 23, 1952.
A number of State and local political subdivisions (most notably the Commonwealth
of Virginia, the State of Oregon via Modification 20, and the State of Wyoming via
Modification 4) liquidated their public employee retirement systems, obtained Social
Security coverage for their former retirement system employees, and subsequently established
a new retirement system for the employees to supplement the Social Security coverage.