Macron buckles on raising France’s retirement age in budget bill

Link: https://www.ft.com/content/cf3eff53-2dfb-4530-a756-1e1361990d7d

Excerpt:

French president Emmanuel Macron has decided against pushing through a rise in the retirement age to 65 in a budget bill, backing off an idea that had angered labour unions and divided his centrist alliance.

The move signals how Macron has been forced to contend with a stronger opposition in his second term after his party lost its majority in parliament in June.

….

Prime Minister Élisabeth Borne told Agence France-Presse on Thursday that the government would start negotiations with labour unions, employers and other political parties with a view to passing a law over the coming months.

The government still wants to raise the retirement age from 62 at present to 65, one of Macron’s campaign promises that he sees as key to fixing France’s public finances.

Author(s): Leila Abboud

Publication Date: 29 Sept 2022

Publication Site: Financial Times

Social Security COLA for 2023 Estimated at 8.7%

Link: https://www.thinkadvisor.com/2022/09/13/social-security-cola-for-2023-estimated-at-8-7/

Excerpt:

The consumer price index data for August, released Tuesday, shows 8.3% inflation over the past 12 months before a seasonal adjustment and was 0.1% from July to August on a seasonally adjusted basis. In July, prices rose by 8.5% over 12 months and were unchanged from June.

Based on the new data through August, The Senior Citizens League estimates the Social Security cost-of-living adjustment, or COLA, for 2023 could be 8.7%, lower than the 9.6% it predicted last month.

An 8.7% COLA would be the biggest increase since 1981. The adjustment would increase the average retiree benefit of $1,656 by $144.10, according to the league.

Author(s): Dinah Wisenberg Brin

Publication Date: 13 Sept 2022

Publication Site: Think Advisor

Social Security Reform: Taxation Options

Link: https://www.actuary.org/sites/default/files/2022-08/SocSecReformTaxation0822.pdf

Graphic:

Excerpt:

Social Security was originally
funded by a tax on the wages of
covered workers plus interest on
accumulated taxes not yet paid
out as benefits. Later, a tax on the
benefits of some beneficiaries
was added.
• Both the tax rate and the limit
on wages subject to taxation
have been raised periodically to
fund increases in the scope and
amount of benefits.
• According to the 2021 Social
Security Trustees Report,
accumulated assets will be
depleted by 2034 and income
to the system thereafter will be
insufficient to pay all scheduled
benefits when due.
• Some or all of this shortfall can
be averted by raising the tax rate
on wages, increasing the limit
on wages subject to taxation,
broadening coverage to include
all state and local government
employees, increasing taxes on
benefits, and/or creating new
taxes dedicated to funding Social
Security benefits.
• This issue brief explores a
wide variety of proposals for
increasing system revenue
that have been made over the
years by members of Congress,
government-appointed panels
and commissions, and outside
experts.

Author(s): American Academy of Actuaries Social Security Committee

Publication Date: August 2022

Publication Site: American Academy of Actuaries

Social Security Reform: Benefit Formula Options

Link: https://www.actuary.org/sites/default/files/2022-08/SocSecReformBenefits0822.pdf

Graphic:

Excerpt:

From its inception, the formulas
for determining benefits payable
under the Social Security System
have included elements of
individual equity and social
adequacy, so that benefits vary
in proportion to differences
in worker contributions, yet
benefits are sufficient to meet
the deemed financial needs
of most workers and covered
dependents.
• According to the 2021 Social
Security Trustees Report,
accumulated assets will be
depleted by 2034 and income
to the system thereafter will be
insufficient to pay all scheduled
benefits when due.
• Some or all of this shortfall
can be averted by changing
the primary formula for retired
worker benefits, changing the
formulas for determining the
benefits of eligible spouses and
other dependents of workers,
and/or changing the formula for
computing annual cost-of-living
increases.
• This issue brief explores a
wide variety of proposals for
changing the formulas for
determining benefits that
have been made over the
years by members of Congress,
government-appointed panels
and commissions, and outside
experts, with an eye toward how
the proposed changes would
affect the balance between
individual equity and social
adequacy.

Author(s): American Academy of Actuaries Social Security Committee

Publication Date: August 2022

Publication Site: American Academy of Actuaries

Congressional Bill Could End Windfall Elimination

Link: https://www.yahoo.com/video/congressional-bill-may-soon-end-194009302.html

Excerpt:

The wind fall elimination provision (WEP) reduces the amount of Social Security benefits people can collect if they receive a government retirement plan in addition to Social Security. It applies only to workers who did not pay Social Security taxes, and so did not earn credits toward Social Security income during their working years.

According to the Congressional Research Service, roughly 6% of workers don’t receive Social Security credits in a given year. Most are local, state and federal employees who don’t pay Social Security taxes because they qualify for government pensions instead. For example, these are federal civilian employees who receive their retirement through the Civil Service Retirement System. The rest are workers covered by alternative retirement schemes, such as Railroad Retirement, or poverty-level workers who earn too little to qualify.

…..

Government Pension Offset (GPO)

The GPO cuts the benefits issued to retirees who receive both their own Social Security payments and a spouse’s government pension payments. The GPO aims to prevent double earning by someone who begins collecting their spouse’s retirement benefits. In the case of the GPO, it reduces a recipient’s Social Security payments by two-thirds of the pension payments that they receive. For example, say that a government worker received a monthly pension of $750. After their death, their spouse is eligible to continue collecting that pension. The pension offset, however, would reduce the surviving spouse’s Social Security payments by $500 per month.

The GPO only applies when someone directly collects their spouse’s pension benefits in addition to their own Social Security benefits, such as when that spouse dies. It does not apply to a household where both people are alive and collecting their own retirement benefits. It also only applies when the government worker did not pay Social Security taxes during their working years.

…..

Almost 340 members of Congress agree that it’s time to eliminate the windfall elimination, and retired public workers could benefit by more than $6,000 per year. In 2021 Rep. Rodney Davis, R-Ill., introduced the Social Security Fairness Act. This bill would repeal the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) from Social Security payments. If it passes public employees could see a significant bump in their retirement incomes, and it may pass soon.

At time of writing the Social Security Fairness Act had 294 sponsors in the House of Representatives. Its companion bill in the Senate had 41 sponsors. The measure has been placed on a legislative fast-track. By removing the Windfall Elimination Provision and the Government Pension Offset, this law targets two issues that public unions have long criticized.

Author(s): Erid Reed

Publication Date: 7 Aug 2022

Publication Site: Yahoo News

Will Democrats Try Cutting Social Security and Medicare After a Disastrous Midterms?

Link: https://jacobin.com/2022/06/austerity-entitlement-reform-social-security-democrats-gop

Excerpt:

Days after Obama lamented Democrats’ 2010 electoral “shellacking,” his commission released a plan to slash Social Security benefits and raise the program’s eligibility age. Economist Paul Krugman noted at the time that the commission also suggested using newly gained revenue to finance “sharp reductions in both the top marginal tax rate and in the corporate tax rate.”

The plan ultimately did not receive the fourteen commission votes it needed to move forward, and a few years later in 2012, the House voted down a version of the proposal. That didn’t stop the Obama-Biden administration’s push: right after winning reelection — and after cementing much of the George W. Bush tax cuts — they tried to limit cost-of-living increases for Social Security, to the applause of Republican lawmakers.

…..

Like Obama, Biden campaigned on a promise to protect Medicare and Social Security. But as we have reported, Biden is already affirming big Medicare premium increases and accelerating the privatization of that health care program. Biden also has not pushed to fulfill his promise to expand Social Security, even though there is new Democratic legislation that would do so.

And now with Graham’s comments, Republicans are banking on him becoming the old Joe Biden on Social Security if they win in November.

It’s not an insane political bet. After all, Biden for decades proposed cuts and freezes to Social Security and publicly boasted about it. Indeed, Biden spent most of his career depicting himself as an allegedly rare and courageous Democrat who was willing to push off his party’s base and tout austerity.

Author(s): David Sirota

Publication Date: 16 Jun 2022

Publication Site: Jacobin

Sanders’ Social Security Bill Would Extend Payroll Tax to Capital Gains for High Earners

Link:https://www.thinkadvisor.com/2022/06/10/bernie-sanders-new-social-security-bill-would-extend-payroll-tax-to-capital-gains-for-high-earners/

Excerpt:

Sen. Bernie Sanders, I-Vt., and Rep. Peter DeFazio, D-Ore., introduced Thursday the Social Security Expansion Act (SSEA), which would, among other measures, boost benefits, adopt the Consumer Price Index for the Elderly, or CPI-E, for benefit increases, and subject all income above $250,000 — including capital gains — to the Social Security payroll tax.

Dan Adcock, Director of Government Relations and Policy at the National Committee to Preserve Social Security and Medicare, told ThinkAdvisor Friday in an email that the DeFazio-Sanders bill, like the Social Security 2100: A Sacred Trust, introduced by Rep. John Larson, D-Conn., “both extend solvency and improve benefits.”

The Larson bill, however, “is consistent with President Biden’s pledge not to raise taxes on Americans earning less than $400,000 per year,” Adcock said, while “the Sanders-DeFazio bill is not.”

A Sacred Trust adopts the consumer price index for the elderly as the basis of the annual cost-of-living adjustment (COLA) and applies the payroll tax to annual wages above $400,000.

Author(s): Melanie Waddell

Publication Date: 10 June 2022

Publication Site: Think Advisor

Why Social Security Looks ‘Relatively Good’ — for Now

Link: https://www.thinkadvisor.com/2022/06/03/social-security-looks-relatively-good-now-long-term-outlook-still-ugly-ssa-actuary/

Graphic:

Excerpt:

In a post-mortem of the Social Security Trust Fund report released Thursday, the Bipartisan Policy Center hosted a webinar featuring speaker Steve Goss, chief actuary of the Social Security Administration. Goss looked beyond the headlines stating that the Old-Age and Survivors Insurance will run out in 2034 (a slight improvement from last year’s forecasted demise of 2033) and that the Disability Insurance fund is now solvent for another 75 years.

“We’re in a little better shape [than 2021] because the economy has come roaring back to such a wonderful extent,” Goss said.

He also pointed out that labor demand has had a “remarkable rebound.” For example, it took 10 years for the job market to come back after the 2008 Great Recession. However, the 2020 recession, which was “very deep and very abrupt,” has also reversed just as quickly and in the first quarter of 2022, “we are virtually back to the high level that we had just before the start of the recession.”

Author(s): Ginger Szala

Publication Date: 3 June 2022

Publication Site: Think Advisor

A Widening Gap in Life Expectancy Makes Raising Social Security’s Retirement Age a Particularly Bad Deal for Low-Wage Earners

Link: https://sections.soa.org/publication/?m=58953&i=668685&view=articleBrowser&article_id=3731911&ver=html5

Graphic:

Excerpt:

Many recent studies find the life expectancy gap is growing. By how much depends on how and when it’s measured. In 2014, the Congressional Budget Office (CBO) calculated that a 65-yearold man in the upper quintile (fifth) of life earnings could be expected to live more than three years longer than a similar man in the lowest quintile. By 2039, the difference would double to six years.

In a 2015 report, the National Academy of Sciences compared the 1930 and 1960 birth cohorts and found that life expectancy for the bottom quintile of men at age 50 decreased slightly to 26.1 years over the 30-year period. Meanwhile, life expectancy rose for men age 50 in higher-income quintiles. As shown in Figure 1, the life expectancy gap between the bottom (quintile 1) and top fifth of the income distribution widened from 5.1 to 12.7 years. In 2016, a Brookings study found, for men born in 1940, those in the lowest income decile at age 50 could expect to live to be about 76 years old compared with 88 years for the highest income decile. Another research team, led by Raj Chetty, found that disparity in longevity continued to increase over 2001–2014; the average gap between the bottom and top 1 percent was 14.6 years for men and 10.1 years for women.

Author(s): Karl Polzer

Publication Date: August 2020

Publication Site: In the Public Interest, SOA

As our entitlements crisis gets closer, a solution moved farther away

Link: https://www.washingtonpost.com/opinions/2022/06/09/social-security-medicare-crisis-approaching/

Excerpt:

The annual Social Security trustees report is once again upon us, and this year it actually bears some good news: The projections give us an extra year before the trust fund is exhausted in 2035.

At least, this sounded like good news when I first heard it. Then I remembered that I have been writing about these trustees reports for more than 15 years. When I started, all these projections sounded comfortably far off — we had decades to fix the problem! Now we have 13 years. And in all that time, we have done nothing at all, except watch the date of insolvency advance.

In 2008, it was 2040, and the people likely to be worst affected — those who would be eligible to retire just as the trust fund was exhausted — were 35. Now, the people facing the most disruption are 54, much closer to retirement than to their college graduation.

In the meantime, the politics of fixing America’s old-age entitlements has gotten considerably worse.

Author(s): Megan McArdle

Publication Date: 9 June 2022

Publication Site: Washington Post

The state pension – a creaking centenarian

Link: https://cpd180322.pensions-expert.com/

Graphic:

Excerpt:

Separate SPAs for men and women were introduced in 1940 — age 65 for men and 60 for women, with a decision to equalise the SPA for men and women trailed in the 1993 white paper ‘Equality in state pension age’. Now that the same age applies for both men and women, at 66, there is still huge controversy over the notice period and quality of information given to women over the age of 50 on the exact timetables for this change. 

Demography has increasingly put the whole system under strain. Andrew Tully, technical director at Canada Life, warns: “By 2045, the number of people of pensionable age will grow to 15.2mn, an increase of 28 per cent on the level in 2020. The ‘oldest old’ cohort is also increasing, with the number of people aged 85 and over projected to almost double to 3.1mn by 2045. 

“At the same time, the working age population will increase by much less — around 4.5 per cent up by the mid-2030s, but then remaining around that level by 2045. Meanwhile, we are seeing a decrease in the number of children, with those aged 0 to 15 projected to fall by nearly 9 per cent by mid-2030.”

Author(s): Stephanie Hawthorne

Publication Date: 18 March 2022

Publication Site: Pensions Expert