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Old-law Contribution and Benefit Base

Automatic Increases

Contribution & Benefit Base

Wage-indexed Amounts

Year of Coverage

Latest amount & definition
The "old-law" contribution and benefit base for 2008 is $75,900. This is the base that would have been effective without the enactment of the 1977 amendments to the Social Security Act. The present-law contribution and benefit base is substantially higher than the old-law base.

Purpose of the old-law base
The old-law contribution and benefit base is used by:

  • the Railroad Retirement program to determine certain tax liabilities and tier II benefits payable under that program to supplement the tier I payments which correspond to basic Social Security benefits,
  • the Pension Benefit Guaranty Corporation to determine the maximum amount of pension guaranteed under the Employee Retirement Income Security Act,
  • Social Security to determine a year of coverage in computing the special minimum benefit, and
  • Social Security to determine a year of coverage (acquired whenever earnings equal or exceed 25 percent of the old-law base for this purpose only) in computing benefits for persons who are also eligible to receive pensions based on non-covered employment.

Determination of the old-law contribution and benefit base for 2008
By law, the old-law contribution and benefit base for 2008 is determined to be the 1994 old-law base ($45,000) multiplied by the ratio of the national average wage index for 2006 to that for 1992, or, if larger, the 2007 old-law base ($72,600). If the amount so determined is not a multiple of $300, it is rounded to the nearest multiple of $300.

Calculation details
Amounts in
1994 old-law base$45,000
1992 average wage index$22,935.42
2006 average wage index$38,651.41
Computation$45,000 times $38,651.41 divided by $22,935.42 equals $75,835.26, which rounds to $75,900.
Higher amount$75,900 exceeds $72,600, so the old-law base for 2008 is $75,900 Portal to U.S. government agencies Privacy Policy  | Website Policies & Other Important Information  | Site Map
Last reviewed or modified Tuesday Mar 18, 2008
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