House Ways & Means Subcommittee Issues Testimony From National Committee to Preserve Security & Medicare
"My name is
Importance of
"For 84 years the
"
"While
"Women, and especially women of color, are less likely than men to have employer pensions. And when women do have pensions, they tend to be smaller on average than those earned by men. The picture is even more dismal for individuals from communities of color, where less than half of employed African Americans and less than one-third of employed Latinos are covered by employer-sponsored retirement plans.
"Compounding these problems, women have a history of lower earnings during their working years, take more time out of the workforce to care for family members and live in more difficult economic circumstances. As a result, they enter retirement with little or no protection from private pensions, inadequate retirement savings, and smaller
"The effects of these disparities are magnified for women of color. They are disproportionally lower earners and are more likely to have worked in part-time positions. A substantial number of women of color approach retirement with little or no retirement savings. The absence of alternative financial support has the effect of leaving women of color primarily dependent upon what is usually a very modest
Now is the Time to Improve Social Security Benefits
"The National Committee believes that it is vitally important that
"The proposals that we have endorsed pass this test. All of these proposals are intended to provide greater protection to all Americans, but with a special focus on the needs of women. By granting credits for child/elder care years, improving the adequacy of the special minimum benefit, increasing the amount of the widow's and widower's benefit when a spouse dies, and by using a consumer price index designed specifically to measure the effects of inflation on the elderly, the adequacy of
The National Committee's Recommendations to Improve Benefits
"What follows is a description of the kinds of benefits individuals can receive from
* Improving Survivor Benefits. Individuals living alone, especially women, are sometime forced into poverty because of benefit reductions stemming from the death of a spouse. Widows from low-earning or wealth-depleted households are particularly at risk of poverty from these benefit reductions, which can reduce family benefits by as much as 50 percent. Providing a widow, widower, or surviving divorced spouse with less than 75 percent of the couple's combined benefit treats one-earner and two-earner couples more fairly and reduces the likelihood of leaving the survivor in poverty. The new benefit guarantee would be capped at the monthly benefit level of a lifelong average earner (about
* Providing Social Security Credits for Caregivers. One of the principal reasons women have fewer assets and less income in retirement than men is that they often interrupt their participation in the labor force to provide services to family members. This service most often takes the form of providing care to children, and more and more to elderly or disabled parents and other family members. Because of the nature of the formula used in its calculation, these temporary interruptions can lead to a significant reduction in the amount of a caregiver's
"Over the years a number of approaches have been advanced to remedy the effect of caregiving on
"These imputed, or deemed, wages would help even out the gaps in a caregiver's earnings record and avoid the benefit reductions that often stem from them. Under our proposal, we would limit deemed caregiver wages to no more than 50 percent of a year's average annual wage (
* Enhancing the Special Minimum PIA. In addition to computing the PIA based on average lifetime earnings,
"But because the Special Minimum Benefit has for many years been indexed to inflation rather than to growth in wages, it needs to be updated. Our proposal does this. First, we recommend adopting wage growth as the metric used to make future adjustments to this benefit. We also incorporate into the computation the concept of providing years of coverage to those who must leave the workforce in order to provide care to family members.
"Second, we recommend that the Special Minimum Benefit be increased so that it is equal to 150 percent of the poverty level for a single aged person, which would yield a maximum monthly benefit of about
"Finally, we recommend that in calculating Supplemental Security Income (SSI) benefits for individuals who qualify for the Special Minimum Benefit, that only the benefit payable under the standard average indexed monthly earnings (AIME)
* Equalizing Rules for Disabled Widows and Widowers. Widows, widowers, and surviving divorced spouses can qualify for
* Benefit Equality for Working Widows and Widowers. Under current law, the benefit for surviving spouses is generally capped at the amount the deceased spouse would receive if she/he were still alive. If a deceased spouse were to retire before reaching his/her normal retirement age, the surviving spouse inherits the resulting actuarial reduction. However, the amount of the reduction is limited to no more than 82.5 percent of the deceased spouse's full unreduced retirement benefit. Apart from this limited protection, a surviving spouse can neither cancel a spouse's early retirement decision nor enhance one's widow's benefit by delaying one's own retirement.
"We believe the surviving spouse's benefit should no longer be tethered to the reduction stemming from the deceased spouse's early retirement decision. We recommend that current law be amended to provide that the surviving spouse's age at the time of application be the only factor considered in determining the actuarial reduction of a surviving spouse's benefit.
* Strengthening the COLA. When automatic cost-of-living adjustments (COLAs) for
"Beginning in 1987, the
"The current CPI-W formula does not come close to staying in line with the rapidly-increasing cost of health care, which consumes a significant portion of every retiree's benefit. Although it is still an experimental index that needs more work to be fully developed, we believe the CPI-E is a more accurate measure of inflation for the purpose of protecting
"We urge
* Restoring Student Benefits.
* Improving the Basic Benefit for All Beneficiaries. After years of operating under a COLA which does not reflect the higher inflation attributable to health expenditures and the fact that seniors devote a higher percentage of their monthly spending to health care costs, seniors should have their increased costs offset by an across-the-board benefit increase. This increase would also compensate seniors for the losses they have suffered due to recent economic turmoil. Women, especially, who have worked a lifetime with low pay are financially vulnerable in retirement because they are less likely to have private pensions or discretionary income that would allow for saving. We recommend the basic benefit of all current and future beneficiaries be increased by five percent of the average benefit (approximately
* Improve Benefits for Disabled Adult Children. One of the categories of childhood benefits that is payable on a worker's record is benefits to an adult child who becomes disabled before reaching age 22. In addition to being disabled, the child must never have been married at the time the application is filed. Eligibility continues as long as the child remains disabled and unmarried. Benefits may also be affected if the child becomes employed. Marriage at any time ends entitlement to this type of benefit, unless the child's husband or wife is also receiving benefits either as a disabled adult child or disabled widow or widower. Marriage to anyone else permanently ends a disabled adult child's eligibility unless the marriage is annulled.
"When a disabled adult child qualifies on a parent's record, benefits for the child and for other family members may be adjusted due to the family maximum. If all eligible family members live in the same household, expenses and income are usually shared. However, people with disabilities are increasingly deciding to live independently. A consequence of doing so is a substantial reduction in a family's income from
"We urge
Options for Strengthening Social Security's Financing
"While some assert that the
"According to the Social Security Trustees' 2018 report, the program's funding shortfall, known as an actuarial deficit, is 2.84 percent of taxable payroll. In our view, this shortfall is manageable and resolvable. There are a number of straightforward reforms that, if adopted, would increase
* Eliminate the Cap on Social Security Payroll Contributions. Currently, there is a cap of
* Gradually Increase the Social Security Contribution Rate. Scheduling a gradual increase in the
Conclusion
"We believe there is a consensus supported by an overwhelming majority of Americans to close
"We believe that the policy options that I have recommended today strike that balance. Despite the dramatic increase in women's participation in the national economy, the benefits derived from that participation have fallen short. Women continue to have fewer assets and income in retirement and depend more heavily than do men on
"Thank you for the opportunity to testify today on these important issues. I would be happy to answer any questions."
[TheHill]
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