Benefits October 11, 2018

Social Security Benefits to Increase in 2019

They are rising 2.8%, in keeping with a rise in the DOL’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

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Social Security and Supplemental Security Income (SSI) benefits will increase by 2.8% in 2019, the Social Security Administration announced. This is in keeping with an increase in the cost of living, as measured by the Department of Labor (DOL)’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Federal law requires the Social Security Administration to make cost of living adjustments (COLA) tied to this index.

As a result, more than 67 million Americans will see their Social Security and SSI benefits rise in the coming year.

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In addition, the maximum amount of earnings subject to the Social Security payroll tax and the retirement earnings tax exemption amount will change for 2019. The taxable maximum will increase to $132,900. The earnings limit for people born in 1943 through 1954 will increase to $17,640, with $1 of benefits deducted for each $2 earned over $17,640. The earnings limit for people turning 66 in 2019 will increase to $46,920, and the administration will deduct $1 from benefits for each $3 earned over this amount until the month the worker turns age 66. There is no limit on earnings for workers who are at full retirement age, i.e. 66 or older for the entire year.

Americans will be able to see how their benefits are impacted in December, when the administration will post Social Security COLA notices online for retirement, survivors and disability beneficiaries who have a Social Security account.

Beneficiaries can opt to continue receiving their COLA notices by mail or online.

Data and Research October 11, 2018

‘Red Zone’ Multiemployer Pension Plans May Never Recover

But with Congressional assistance, there is hope for these plans, Segal Consulting says.

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The subset of “red zone” multiemployer pension plans that are in critical and declining (C&D) status projected to be insolvent within the next 20 years may never recover without Congressional help, Segal Consulting maintains. Participants in these plans are at risk of reduced benefits, including current retirees.

There has been a double-digit decrease in the average market value funded percentage of plans in C&D status since 2010, compared to a double-digit increase for non-C&D plans.

Characteristics of C&D plans include a high retiree and inactive-to-active ratio and a high “burn rate,” i.e. the rate of asset decline, without regard to investment income.

Over the last 10 years, most red zone plans have taken corrective actions. They have increased their average contribution rate by more than 50% and have reduced adjustable benefits for more than 80% of participants. Some red zone plans are now in the yellow or green zone. By comparison, C&D plans are not recovering.

Segal Consulting notes that the Congressional Joint Select Committee for the Solvency of Multiemployer Pension Plans is currently weighing options for strengthening these plans.

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