Pensions & Benefits in the USA

In the United States, employers and employees both contribute to the social security system, which is a federal retirement programme, in the form of a tax based on an employee’s income. The tax is paid pursuant to the Federal Insurance Contributions Act (known as the FICA tax) in the form of a payroll tax. The current FICA tax rate is 15.3% of an employee’s income, with the employer and the employee each paying 50% of the tax (7.65% each). However, the employee’s annual contribution is capped when his or her income reaches a certain amount that is adjusted annually (for 2017, this amount is $127,200).