June 17, 2014 (PLANSPONSOR.com) – Two U.S. Senators have introduced the Retirement and Income Security (RAISE) Act.
bill would increase Social Security payments for divorced spouses, enhance
benefits for widows and widowers, and extend eligibility for children of
retired, disabled or deceased workers. The additional benefits included in the
RAISE Act would be offset by the application of a 2% payroll tax rate on annual
earnings over $400,000—an offset that means Social Security will continue to be
fully funded, according to a news release by Senator Mark Begich (D-Arkansas),
who introduced the bill along with Senator Patty Murray (D-Washington).
RAISE Act would ensure that our Social Security system reflects the realities
of today’s work force, and would strengthen benefits for struggling seniors—most
commonly women—as well as disabled individuals and young adults who have faced
serious hardship in their immediate families. At the same time, the RAISE Act
would shore up the Social Security Trust fund to help make sure it is there for
future generations of seniors, using an approach that protects middle class
families and asks those who can most afford it to pay their fair share,” Murray
said in a blog on her website.
the RAISE Act:
benefits for divorced spouses. Under
current law, the divorced spouse is only entitled to receive benefits under the
former spouse’s earnings if she or he was married for 10 years. Beginning in
2016, the RAISE Act would allow those with less than 10 years of marriage to
be eligible for benefits under the former spouse’s earnings. Eligibility would
be phased in, so that those married less than 10 years would receive less than
100% of the spousal benefit. These partial benefits would gradually decrease in
increments of 10% and phased out for those with less than five years of
marriage. For example, those with nine years of marriage would receive 90%. The
same formula will apply to survivors’ benefits for divorced spouses.
benefits for widows and widowers. The RAISE Act would establish an alternative
benefit for a surviving spouse where both husband and wife established insured
status as retired workers. For the surviving spouse, the alternative benefit
would equal 75% of the sum of the survivor’s own worker benefit and the Primary
Insurance Amount (PIA) of the deceased spouse. The alternative benefit would be
paid only if more than the current law benefit. This benefit would be available
to surviving spouses on the rolls at the beginning of 2016 and those becoming
eligible after 2016.
benefit eligibility for children of retired, disabled or deceased workers. This
provision of the RAISE Act applies if the child is in high school, college, or
vocational school. Under current law, minor children younger than 18, and high
school students younger than 19 are entitled to benefits if they are the child
of a retired, disabled or deceased worker. Beginning in 2016, this provision extends benefits for full-time
students until the age of 23 if they are a child of a retired, disabled or
those who can most afford it to pay their fair share towards strengthening and
shoring up the Social Security Trust Fund. Beginning in 2015, the RAISE Act would apply a 2% payroll tax rate on earnings
greater than $400,000, with the threshold wage-indexed after 2015. The bill
provides a corresponding credit for earnings in a secondary average indexed
monthly earnings (AIME) formula for benefit computation.
RAISE Act extends the life of the Social Security Trust Fund from 2033 to 2034,
according to Murray.
at a recent Senate hearing included benefit changes as Social Security reforms
that could boost potential retirement income for workers (see “Reforming Social Security to Increase Workers’ Retirement Income”).
The Social Security
Administration has released a report of estimates of the financial effects of
the RAISE Act on Social Security Trust Funds. More information about the RAISE
Act is here.