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The amendments raise the wage base ceiling and boost tax rates, impose an additional projected $227 billion in payroll taxes over 10 years, and modify benefit-computation formulas using provisions such as decoupling, while also phasing in expanded earnings before benefit 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&LYBRAND\n\nNeWSleter  \nEDITOR:MORTON MEYERSON □ Copyright 1978 by Coopers &Lybrand  \n# SOCIAL SECURITY AMENDMENTS OF 1977□ ContentsINTRODUCTION□1Part 1:KEY PROVISIONS□2Benefits□ 2\n\nFigure 1:New Social Security Taxes□ 3Other Major Changes□ 4  \nPart 2:EFFECT ON PRIVATE RETIREMENT PLANS□ 4Figure 2:Retirees Can Earn More Without Losing Benefits□ 5Excess and Stepped-Up Plans□ 5Offset Plans □ 7  \nFigure 3:Coverage for Nonprofit Employees□ 7FUTURE CONSIDERATIONS□8  \n# Businesses Should Evaluate the Future Impact,Now,Of Social Security Changes on Private Pension PlansINTRODUCTION\n\nBusinesses should be alert to the full impact of the recent changes to the socialsecurity law,especially on integrated employee benefit plans.This includes retire-ment plans as well as other plans that directly or indirectly coordinate benefits withsocial security,such as certain disability and survivor income plans.A study of thenew amendments points up the fact that for many the effect over the next severalyears can be substantial.In all cases,private benefit plans should be reviewed now,to evaluate plan design and related costs.  \nThe latest amendments impose a considerably heavier tax burden on both em-ployer and employee,primarily,by raising the ceiling of the social security wagebase and,secondly,by boosting the tax rates.Congress,moreover,enacted numerouschanges in the formulas for computing benefits,including the so-called decouplingprovision.  \nOther revisions,however,could ease reporting requirements foremployers and,insome instances,eliminate double taxation for affiliated corporations and multi-nationals.Another significant amendment(to be phased in)permits retired personsto earn more before their social security benefits are cut back.  \nThe basic purpose of the revisions is the restoration of fiscal soundness to thesocial security system by attempting to eliminate the potential deficit arising fromthe ever-widening chasm between benefit payouts and collections.The new legis-lation will levy an additional $227 billion in payroll taxes over the next 10 years togive short-term relief to the financially troubled retirement,survivor,and disabilitysystem.At the same time,there is some question over whether or not these revisionsmight dampen the nation's economic growth.From the employer's standpoint,theincreasingly heavy burden of taxation could slow the hiring of new employees;from  \nthe employee's viewpoint,the heavier tax load could diminish his purchasing andsaving power.  \nSome of thelawmakers themselvesfeelthat the remedies in the new social securitylaw will probably do no more than buy time.The most dramatic step-up in taxeswould occur in 1979 and the early 1980s,and there is at least some thought ofrevising the funding method before these increases take effect.Representative AlUllman,chairman of the House Ways and Means Committee,acknowledged asmuch in his comments during the House floor debate on the House-SenateConference bill.He said:“...We will move as expeditiously as possible,certainlywithin the next five-year time frame,toward adopting a new revenue mechanismwhereby we can back off from these major increases....”  \nWhile this latest social security measure has many facets,we have divided ourdiscussion into two major sections.Part 1 summarizes the key provisions,withtables and examples;Part 2 examines the dramatic—and as yet not completelyclear—impact on integrated private pension plans.  \n## Part 1\n\nKEY PROVISIONS  \nThe large sums required by the new law willbe generated by gradual raises in the socialsecurity tax rate and steep increases in thewage base on which the tax is levied.Theselevies,to begin in 1979,will preserve\"pari-ty\"by imposing the same tax rate and wagebase on both employers and employees.Thehigher wage base and rate that went into ef-fect on January 1 of this year were mandatedby earlier social security legislation.Notethat prior l","cbCairY7MqeoDmrC","https://ap.wps.com/l/cbCairY7MqeoDmrC","pdf",2370941,13,"English","# Introduction\n# Part 1\n## Benefits\n# Part 2\n## Effect on private retirement plans\n# Future Considerations","[{\"question\":\"Why should businesses review private benefit plans now under the 1977 amendments?\",\"answer\":\"The amendments can have substantial effects over the next several years, and private benefit plans should be reviewed promptly to evaluate plan design and related costs in light of the new Social Security changes.\"},{\"question\":\"What major changes increase Social Security payroll taxes for employers and employees?\",\"answer\":\"Taxes increase mainly by raising the ceiling of the Social Security wage base and boosting the tax rates, with the higher wage base and rate intended to preserve tax parity for both employers and employees.\"},{\"question\":\"How does the decoupling provision affect future Social Security benefit calculations?\",\"answer\":\"Decoupling stops CPI increases from affecting the computation of the first Social Security benefit payment, countering the prior “coupling” approach that applied inflation adjustments twice.\"}]","COOPERS & LYBRAND - Social Security Amendments of 1977 - Businesses Should Evaluate the Future Impact, Now, of Social Security Changes on Private Pension Plans | PDF",1790602276,33]