TN 11 (11-22)

SL 30001.320 Retirement System Coverage Group

A retirement system coverage group is a grouping that covers positions that are also covered under a retirement system or public pension. For the coverage group to be a retirement system coverage group, a retirement system or public pension must have covered the positions at the time the coverage group was created.


The mere fact that a coverage group covers positions that are under a retirement system or public pension plan does not necessarily make a coverage group a retirement system coverage group, as absolute coverage group positions may later be brought under a retirement system.

We apply different rules to retirement system coverage groups than we do to absolute coverage groups, as explained in the following sections (see POMS SL 30001.321 through SL 30001.334 and SL 30001.340 through SL 30001.350).

A. Definition of retirement system for Section 218 purposes

Section 218(d)(4) of the Social Security Act (Act) defines a retirement system as a pension, annuity, retirement, or similar fund or system established by a State or political subdivision. The plan is considered established by the entity if there is any payment of public funds toward the cost of the plan or the plan is established under the entity's authority. The system need not have been created by the legislature of the State or the political subdivision and need not be a plan under which the benefits are guaranteed by State constitution. A retirement system can include a group annuity policy purchased by a State or political subdivision from a private insurance company to provide retirement benefits for its employees. A retirement system is established if State law requires retirement system protection for employees on a compulsory basis (this is true regardless of whether the employing entity has actually implemented the law).


Any distinct tier or plan within a retirement system that qualifies as an independent fund (i.e., stock or sum of money, portion of revenue) that is set apart for the particular purpose or specified payments of retirement, pension, or annuities may be treated as a separate retirement system for purposes of coverage based on the definition of “retirement system” contained within Section 218(b)(4). However, if the funds for the tier or plan are comingled with funds for any of the other plans, it cannot be considered a separate retirement system for purposes of establishing coverage.

B. Legislative authority for retirement system coverage

The 1954 Social Security amendments authorized coverage for employees in positions under a retirement system effective January 1, 1955 and prescribed the mechanics for accomplishing such coverage. Congress included the following statement of policy in the Federal law (Section 218(d)(2)):

“It is hereby declared to be the policy of the Congress in enacting the succeeding paragraphs of this subsection that the protection afforded employees in positions covered by a retirement system on the date an Agreement under this section is made applicable to service performed in such positions, or receiving periodic benefits under such retirement system at such time, will not be impaired as a result of making the Agreement so applicable or as a result of legislative enactment in anticipation thereof.”

State legislation must authorize the State to cover retirement system positions.


A few States established coverage for retirement system positions before 1955 by receiving specific authority to do so, or by liquidating their retirement systems in order to establish absolute coverage groups and then creating new replacement retirement systems.

C. When positions are considered under a retirement system

The Social Security Administration (SSA) determines whether a position is under a retirement system by looking at the employees in that position. .A position is under a retirement system if any one individual who occupies the position may become a member of the retirement system by virtue of his or her occupancy of the position (see SL 30001.315B and SL 30001.324B3 for newly created or reclassified positions).

Example: A hospital, formerly operated by the State as an integral part of the State government, is now operated by a hospital authority, an instrumentality established for this purpose and legally separate from the State government. The State Employees Retirement System (SERS) covers only positions of State employees. Employees, formerly employed by the State who became employees of the hospital authority on the date of its establishment are allowed to retain membership in SERS. Newly hired employees may not become members.

It is possible for a former State employee who retained membership in SERS to occupy hospital positions. As a result, all employees of the hospital authority therefore occupy positions under SERS even though the employees themselves may not be members of SERS (either newly hired employees or existing employees who did not elect to retain SERS membership).

D. Procedure

A State may voluntarily cover a retirement system coverage group under its Section 218 Agreement without regard to the qualifications of the system. A State may extend coverage to a retirement system coverage group only after it holds a referendum (see SL 30001.323; SL 30001.331).

The State may bring the retirement system positions under coverage through either a majority vote process, which is allowed for all States (see SL 30001.323; SL 30001.324), or a divided vote process, which is allowed for specific states only (see SL 30001.331; SL 30001.334). The referendum provides an opportunity to vote for or against coverage to all eligible employees (see SL 30001.323C-D; SL 30001.331D-E) of the retirement system (see SL 30001.321).

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SL 30001.320 - Retirement System Coverage Group - 11/22/2022
Batch run: 11/22/2022