A bill that was introduced last month by House Ways and Means Social Security Subcommittee Chairman John Larson (D-CT) is now seeing support and would increase Social Security benefits, improve the cost-of-living adjustment (COLA) calculation, and repeal the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO).
The National Active and Retired Federal Employees Association (NARFE) has endorsed the legislation and went so far as to say that if the bill were to proceed, NARFE would push to expand the provision to also apply to federal retirement annuities.
According to a statement from Larson’s office, the legislation has been endorsed by more than 100 advocacy groups and also has almost 200 cosponsors.
“For too long, Congress has forsaken its duty to enhance benefits. With 10,000 Baby Boomers a day becoming eligible, and with Millennials needing Social Security more than any generation, the time for Congress to act is now,” said Larson.
Although it is not likely to be enacted this year, TSCL anticipates a major effort to pass it in 2022.
A detailed summary of the “Social Security 2100: A Sacred Trust” bill (HR 5723), highlights some of the major takeaways from the impending legislation:
Across-the-board benefit increase to Social Security.
First, it provides an instant benefit increase for all beneficiaries of $30 a month, which translates to around a 2 percent benefit increase for the average retiree. This would go into effect from 2022-2026 for all beneficiaries.
An updated cost-of-living adjustment.
The bill also helps the annual cost-of-living adjustment (COLA) by basing it on a consumer price index for the elderly (CPI-E), which gauges the cost increases experienced specifically by seniors. According to experts, the CPI-E is projected to be higher than the CPI-W by around 0.2 percentage points per year. Better protection against inflation will certainly benefit older retirees and widows who are more likely to rely on Social Security benefits later in life. Set for activation for COLAs from 2022-2026.
Repealing the government pension offset and windfall elimination provisions.
Importantly, this bill would repeal the Government Pension Offset (GPO) and Windfall Elimination Provision (WEP), altering the affected state and local government retirees to be no longer subject to these reductions in their Social Security benefits. Effective for benefits paid in 2022-2026 to those impacted by WEP and GPO.
Increase in the minimum benefit for long-term low earners.
This will protect low-income, long-term workers through updating the “special minimum benefit”. This means that federal employees who paid into Social Security for many years and worked (even at very low wages), can stay above poverty with their Social Security benefit. For example, an individual who works 30 years and retires at full retirement age would receive a benefit that is 125% of the poverty line. The new minimum benefit is linked to wage levels to guarantee it does not fail in future years. Effective in 2022-2026 for those who first become eligible for benefits during said years.
Increasing rate for inclusion and threshold amounts of Social Security benefits reflected in income.
For tax purposes, this portion of the bill raises the income thresholds above which Social Security must be included in a beneficiary’s income. If an individual’s additional income is higher than specific thresholds, then their Social Security benefits are taxed. Currently, the limits are $25,000 for individuals and $32,000 for couples. This bill seeks to raise the thresholds to $35,000 and $50,000. Again, set to be implemented for taxable years 2022-2026.
Increase in benefits for beneficiaries past 15 years of eligibility.
Lastly, an all-out benefit increase for the elderly and other long-term beneficiaries. The entire amount of the increase is 5 percent of the benefit amount for a lifelong average earner and is paid beginning with the 20th year after each person’s benefit eligibility started. The increase appears in the 16th through 20th year after eligibility. It is also effective in 2022-2026 for all beneficiaries who have been receiving benefits for more than 15 years.
To learn more about the “Social Security 2100: A Sacred Trust” bill, follow the links below:
- Fact sheet on the bill.
- The section-by-section breakdown.
- A list of endorsing organizations can be found here.
- View the press conference.