The Washington Report
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October 16, 2019
Retirement
PBGC Posts First Installment of 2017 Data Tables
On October 7, 2019, the Pension Benefit Guaranty Corporation (PBGC) posted the first installment of the 2017 Data Tables, which include statistics for the PBGC's single-employer and multiemployer programs and for the private defined benefit pension system. This installment provides detailed information about the PBGC’s single-employer program, including claims activity, financial position, premium revenue, benefit payments, and administrative expenses. In 2018, the total premiums paid by single-employer plans decreased by $1.2 billion, an 18% reduction from the prior year’s payments. Also, for the first time in 17 years, the net financial position of the single-employer program was positive.
The 2017 Data Tables are available here.
Other HR/Employment
Social Security Administration Releases 2020 Indexed Figures; Announces 1.6% Benefit Increase
The Social Security Administration (SSA) released the Social Security 2020 indexed figures on October 10, 2019. The SSA announced that there will be a 1.6% Cost-of-Living Adjustment (COLA) for 2020. Some other changes that take effect in January of each year are based on the increase in average wages. Relevant figures are shown below.
COLA:Based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, Social Security and Supplemental Security Income beneficiaries will receive a 1.6% COLA for 2020. (The 2019 COLA was 2.8%.)
Wage Base: The 2020 Social Security wage base is $137,700. (The 2019 amount was $132,900.)
FICA/Medicare Tax Rate: The FICA tax rate remains at 7.65%: 6.20% for Social Security and 1.45% for Medicare combined.
Beginning in 2013, the Affordable Care Act increased the Medicare tax rate on wages by 0.9% (from 1.45% to 2.35%) for higher-income individuals. The payroll tax increase applies to wages over $200,000 for single tax filers and $250,000 for couples filing jointly ($125,000 for a married individual filing separately). The tax rates above do not include the 0.9%. The Internal Revenue Service has provided frequently asked questions on the Medicare tax increase, available here.
Maximum Monthly Benefit: For someone retiring at full retirement age in 2020, the maximum benefit is $3,011. (The 2019 amount was $2,861.)
Annual Earnings Test Limit: For individuals under full retirement age, the 2020 annual earnings test limit is $18,240. (The 2019 amount was $17,640.) For individuals attaining full retirement age in 2020, the annual earnings test limit for the months prior to attaining full retirement age is $48,600. (The 2019 amount was $46,920.) There is no annual earnings test for individuals who have attained full retirement age.
More information on the SSA COLA is available here.
A fact sheet on the SSA's 2020 Social Security changes is available here.
The October 10, 2019, news release is available here.
A more detailed Aon bulletin on the 2020 SSA indexed numbers is available here.