Protecting and Preserving Social Security Act
The Protecting and Preserving Social Security Act proposes two broad reforms to the Social Security program and its funding rules, plus changes to how cost‑of‑living adjustments (COLAs) are calculated: - Cost‑of‑living adjustments: The bill would replace the current COLA indexing method with a new Consumer Price Index for Elderly Consumers (CPI‑E) to determine monthly benefit increases. It also requires the Bureau of Labor Statistics to publish CPI‑E monthly and applies the new index to COLA calculations for months starting in 2026 (roughly, the calendar quarter after enactment). In short, beneficiaries would see COLAs more explicitly tied to spending patterns of older Americans, with a different inflation measure than the current method. - Contribution and benefit fairness (earnings above the current Social Security base and surplus earnings): The bill introduces a phased, partial inclusion of earnings that exceed the existing contribution and benefit base (the wage cap) into both payroll tax funding and benefit computation, beginning in 2026 and tapering down to 0% by 2031. It also creates a new framework for counting “surplus earnings” as part of the benefit formula, effectively adding new components (surplus AIME) to determine the Primary Insurance Amount (PIA). These provisions apply to wages and self‑employment income and would modify how much of high earnings count toward Social Security financing and benefits. Overall, the bill aims to strengthen Social Security by updating COLAs and altering how high earnings are treated for contributions and benefits, with the potential to change both short‑term revenues and long‑term benefit calculations.
Key Points
- 1Cost‑of‑Living Adjustments (COLAs)
- 2- The bill requires the Bureau of Labor Statistics to create and publish a monthly Consumer Price Index for Elderly Consumers (CPI‑E), and to use CPI‑E to compute COLAs.
- 3- CPI‑E would apply to COLA determinations for months ending after July 31 of the calendar year following enactment.
- 4- The amendments to the COLA calculation also specify that, for pre‑1979 law rules and related adjustments, the CPI‑E standard would be used in defining the applicable “Consumer Price Index.”
- 5Portion of earnings above the contribution and benefit base (CB base) counted from 2026 onward
- 6- For wages: An “applicable percentage” (starting at 86% in 2026 and declining each year: 86, 71, 57, 43, 29, 14, 0 for years after 2031) would determine what portion of the remuneration above the CB base is treated in wage/benefit calculations.
- 7- For self‑employment income: A parallel “applicable percentage” schedule (same 86% to 0% sequence) applies to net earnings from self‑employment in excess of the CB base, starting in 2026.
- 8- These changes would affect how much high earnings contribute to Social Security financing and to benefit calculations, effectively phasing in a reduced (over time) inclusion of earnings above the CB base.
- 9Adjustments to the Social Security benefit formula (surplus earnings)
- 10- The bill adds “surplus average indexed monthly earnings” (surplus AIME) into the benefit calculation, creating new components that supplement the traditional AIME in determining the PIA.
- 11- It specifies an initial baseline for surplus earnings (e.g., $8,933 in 2026) and a method to scale future amounts using the national average wage index.
- 12- It creates a two‑part surplus AIME framework: basic AIME (the traditional portion) plus surplus AIME, with new definitions and bend point adjustments to incorporate surplus earnings into benefit calculations.
- 13- The changes would increase potential benefits for individuals with surplus earnings, in a way tied to future wage index data.
- 14Effective dates and scope
- 15- CPI‑E and related COLA provisions apply to months ending after July 31 of the year following enactment.
- 16- The phased inclusion of earnings above the CB base applies to remuneration after 2025 (wages) and calendar years 2026+ (self‑employment income), with year‑by‑year percentage tables.
- 17- The surplus earnings amendments apply to individuals who become eligible for old‑age or disability benefits (or die before eligibility) in calendar years after 2025, with phased implementation tied to 2026 onward.
- 18Administrative and fiscal notes
- 19- The bill authorizes appropriations to implement the CPI‑E index.
- 20- It involves coordinated changes across Social Security title II, the Internal Revenue Code, and related SSA provisions, with the effects spanning wage reporting, payroll taxes, benefit computations, and eligibility.