2011 OASDI Trustees Report
by Charlene Cleo Eiben on Monday, December 3, 2012 at 9:22pm ·
2011 OASDI Trustees Report
IV. ACTUARIAL ESTIMATES
IV. ACTUARIAL ESTIMATES
This chapter presents actuarial estimates of the future financial condition of the Social Security program. The income, cost, and assets or unfunded obligation of the OASI and DI Trust Funds are projected: (1) in dollars over the 10‑year short-range period; and (2) as a percentage of taxable payroll, as a percentage of gross domestic product, and in present-value dollars over the 75‑year long-range period. In addition, a variety of measures of the adequacy of current program financing are discussed. This report distinguishes between: (1) the cost (obligations) of the program, which includes all future benefits scheduled under current law; and (2) expenditures (disbursements), which include actual payments for the past plus only the portion of program cost that is projected to be payable with the financing provisions in current law.
As described in the Overview section of this report, these estimates depend upon a broad set of demographic, economic, and programmatic factors. The estimates presented in this section are prepared under three sets of assumptions to show a wide range of possible outcomes, because assumptions related to these factors are subject to uncertainty. The intermediate set of assumptions, designated as alternative II, reflects the Trustees’ best estimate of future experience; the low-cost alternative I is significantly more optimistic and the high-cost alternative III is significantly more pessimistic for the trust funds’ future financial outlook. The intermediate estimates are shown first in the tables of this report, followed by the low-cost and high-cost estimates. These sets of assumptions, along with the actuarial methods used to produce the estimates, are described in chapter V. In this chapter, the estimates and measures of trust fund financial adequacy for the short range (2011‑20) are presented first, followed by estimates and measures of actuarial status for the long range (2011‑85) and over the infinite horizon. As additional illustrations related to uncertainty, sensitivity analyses of the effects of variation in individual factors are presented in appendix D and probability distributions of certain measures are presented in appendix E.
A. SHORT-RANGE ESTIMATES
Financial adequacy, or solvency, of the trust funds reflects the ability to pay scheduled benefits in full on a timely basis. A standard method of assessing solvency is the “trust fund ratio,” which is defined as the assets at the beginning of a year (which do not include advance tax transfers) expressed as a percentage of the cost during the year. The trust fund ratio represents the proportion of a year’s cost which could be paid solely with the assets at the beginning of that year. A trust fund ratio of 100 percent of annual program cost is generally assumed to provide a reasonable “contingency reserve.” Maintaining a reasonable contingency reserve is important because the trust funds do not have borrowing authority. The trust funds would be unable to pay benefits in full on a timely basis if they were to become exhausted and if annual revenue were less than annual cost. Unexpected events, such as severe economic recessions or large changes in other trends, can quickly deplete reserves. In such cases, a reasonable contingency reserve can maintain the ability to pay scheduled benefits while giving Congress time to address possible changes to the program.
The short-range test of financial adequacy applies to the OASI and DI Trust Funds individually and combined. If the estimated trust fund ratio is at least 100 percent at the beginning of the projection period, the test requires that it be projected to remain at or above 100 percent throughout the 10-year period. Alternatively, if the ratio is initially less than 100 percent, then it must be projected to reach at least 100 percent within 5 years (and not be depleted at any time during this period) and then remain at or above 100 percent throughout the remainder of the 10-year period. This test is applied on the basis of the intermediate estimates. The failure of either trust fund to meet this test indicates that program solvency in the next 10 years is in question and that legislative action is needed to improve short-range financial adequacy.
1. Operations of the OASI Trust Fund
This subsection presents estimates, based on the assumptions described in chapter V, of the operations and financial status of the OASI Trust Fund for the period 2011-20. No changes are assumed to occur in the present statutory provisions and regulations under which the OASDI program operates.1
These estimates are shown in table IV.A1 and indicate that the assets of the OASI Trust Fund would continue to increase throughout the next 10 years under all three sets of assumptions. Based on the intermediate assumptions, the assets of the OASI Trust Fund would continue to exceed 100 percent of annual expenditures by a large amount through the end of 2020. Consequently, the OASI Trust Fund satisfies the test of short-range financial adequacy by a wide margin. The estimates in table IV.A1 also indicate that the short-range test would be satisfied even under the high-cost assumptions (see figure IV.A1 for graphical illustration of these results).
Table IV.A1.—Operations of the OASI Trust Fund, Calendar Years 2006-20 a
[Dollar amounts in billions]
Calendar
year Income
Cost
Assets
Total
Net pay-
roll tax contri-
butions
GF
reim-
burse-
mentsb
Taxa-
tion of
benefits
Net
interest Total
Benefit
pay-
ments
Admin-
istra-
tive
costs
RRB
inter-
change
Net
increase
during
year
Amount
at end
of year
Trust
fund
ratio c Historical data:
2006
$642.2
$534.8
d
$15.6
$91.8
$461.0
$454.5
$3.0
$3.5
$181.3
$1,844.3
361
2007
675.0
560.9
d
17.2
97.0
495.7
489.1
3.1
3.6
179.3
2,023.6
372
2008
695.5
574.6
d
15.6
105.3
516.2
509.3
3.2
3.6
179.3
2,202.9
392
2009
698.2
570.4
d
19.9
107.9
564.3
557.2
3.4
3.7
133.9
2,336.8
390
2010
677.1
544.8
$2.0
22.1
108.2
584.9
577.4
3.5
3.9
92.2
2,429.0
400
Intermediate:
2011
700.7
482.7
90.1
20.9
107.0
605.6
598.0
3.7
4.0
95.1
2,524.1
401
2012
752.8
616.1
4.3
22.9
109.5
633.0
625.1
3.9
4.1
119.8
2,643.9
399
2013
796.4
653.0
d
28.0
115.4
670.0
662.1
3.8
4.1
126.4
2,770.3
395
2014
845.7
690.0
d
33.0
122.7
711.7
703.7
3.9
4.2
133.9
2,904.2
389
2015
893.7
727.1
d
36.3
130.2
757.2
748.9
4.0
4.3
136.5
3,040.7
384
2016
943.4
765.6
d
40.0
137.8
805.6
797.4
4.1
4.1
137.8
3,178.6
377
2017
993.9
803.8
d
44.1
146.1
858.0
849.2
4.2
4.6
135.9
3,314.5
370
2018
1,048.7
844.8
—
47.7
156.2
915.3
906.1
4.3
4.8
133.4
3,447.9
362
2019
1,102.4
884.4
—
51.6
166.4
981.1
971.7
4.5
4.9
121.3
3,569.2
351
2020
1,155.1
923.7
—
55.9
175.4
1,052.6
1,042.8
4.6
5.1
102.5
3,671.7
339
Low-cost:
2011
702.6
484.1
90.6
20.9
107.0
605.4
597.7
3.7
4.0
97.2
2,526.3
401
2012
760.5
623.6
4.3
22.9
109.8
631.9
623.9
3.9
4.0
128.7
2,655.0
400
2013
808.1
664.1
d
27.8
116.2
665.2
657.3
3.8
4.1
143.0
2,797.9
399
2014
861.6
704.7
d
32.5
124.4
702.0
694.0
3.9
4.1
159.6
2,957.6
399
2015
913.4
744.5
d
35.6
133.4
741.8
733.7
4.0
4.2
171.6
3,129.2
399
2016
965.3
783.5
d
39.0
142.7
784.8
776.8
4.1
3.9
180.5
3,309.7
399
2017
1,017.0
821.2
d
42.7
153.0
832.0
823.4
4.2
4.4
185.0
3,494.7
398
2018
1,071.9
860.9
—
46.0
165.1
882.7
873.9
4.3
4.6
189.2
3,683.8
396
2019
1,126.0
899.3
—
49.3
177.3
937.7
928.6
4.4
4.7
188.3
3,872.1
393
2020
1,179.0
937.0
—
52.9
189.0
996.2
986.8
4.5
4.9
182.8
4,054.9
389
High-cost:
2011
698.6
481.3
89.5
20.9
106.9
605.9
598.2
3.7
4.0
92.7
2,521.7
401
2012
745.0
608.2
4.3
23.1
109.5
636.7
628.8
3.9
4.1
108.3
2,630.0
396
2013
789.5
645.6
d
28.4
115.5
679.1
671.2
3.8
4.1
110.4
2,740.4
387
2014
838.4
681.9
d
33.7
122.7
728.5
720.3
3.9
4.2
109.9
2,850.4
376
2015
888.9
721.1
d
37.6
130.1
783.5
775.0
4.1
4.4
105.4
2,955.8
364
2016
943.6
763.9
d
42.0
137.7
844.3
835.9
4.2
4.2
99.3
3,055.0
350
2017
1,000.0
807.4
d
46.8
145.8
910.6
901.4
4.4
4.8
89.4
3,144.4
335
2018
1,056.9
852.2
—
51.2
153.5
983.5
973.9
4.5
5.1
73.5
3,217.9
320
2019
1,112.1
896.1
—
56.0
160.0
1,064.1
1,054.1
4.7
5.3
48.0
3,265.9
302
2020
1,165.6
939.7
—
61.3
164.7
1,153.2
1,142.7
4.9
5.6
12.4
3,278.4
283
a
A detailed description of the components of income and cost, along with complete historical values, is presented in appendix A.
b
Includes reimbursements from the General Fund of the Treasury to the OASI Trust Fund for: (1) the cost of noncontributory wage credits for military service before 1957; (2) the cost of benefits to certain uninsured persons who attained age 72 before 1968; (3) the cost of payroll tax credits provided to employees in 1984 and self-employed persons in 1984-89 by Public Law 98-21; (4) the cost in 2009-17 of excluding certain self-employment earnings from SECA taxes under Public Law 110-246; and (5) payroll tax revenue forgone under the provisions of Public Laws 111-147 and 111-312.
c
The “Trust fund ratio” column represents assets at the beginning of a year (which are identical to assets at the end of the prior year shown in the “Amount at end of year” column) as a percentage of cost for the year.
d
Less than $50 million.
Note: Totals do not necessarily equal the sums of rounded components.
Figure IV.A1.—Short-Range OASI and DI Trust Fund Ratios
[Assets as a percentage of annual cost]
[D]
The estimated income shown in table IV.A1 increases annually under each set of assumptions throughout the short-range projection period. The estimated increases in income reflect increases in estimated OASDI taxable earnings and growth in interest earnings on the invested assets of the trust fund. After decreasing in the period 2008-10, employment is assumed to increase in every year through 2020 for all three alternatives. The number of persons with taxable earnings would increase on the basis of alternatives I, II, and III from 157 million during calendar year 2010 to about 179 million, 174 million, and 170 million, respectively, in 2020. The total annual amount of taxable earnings is projected to increase in every year through 2020 for each alternative. Total earnings increase from $5,333 billion in 2010 to $8,899 billion, $8,774 billion, and $8,927 billion in 2020, on the basis of alternatives I, II, and III, respectively.2 These increases in taxable earnings are due primarily to: (1) projected increases in employment levels as the working age population increases; (2) trend increases in average earnings in covered employment (reflecting both real growth and price inflation); (3) increases in the contribution and benefit base under the automatic-adjustment provisions; and (4) growth in employment and average earnings, temporarily higher than trend, as the economy recovers from the economic recession.
Growth in interest earnings represents a significant component of the overall increase in trust fund income during this period. The effective interest rates payable on trust fund investments are projected to temporarily decline from current levels through 2012, resulting in a slight decline in interest income in 2011. Thereafter, the rapid increase in OASI assets results in a corresponding net increase in interest income. By 2020, interest income to the OASI Trust Fund is projected to be about 15 percent of total trust fund income on the basis of the intermediate assumptions, as compared to 16 percent in 2010.
Rising expenditures during 2011-20 reflect automatic benefit increases as well as the upward trend in the number of beneficiaries and in the average monthly earnings underlying benefits. The growth in the number of beneficiaries in the past and the expected future growth result both from the increase in the aged population and from the increase in the proportion of the population that is eligible for benefits.
The estimates under all three sets of assumptions shown in table IV.A1 indicate that income to the OASI Trust Fund, including interest earned on trust fund assets, would exceed expenditures in every year of the short-range projection period. While trust fund assets are estimated to increase substantially, they will increase at a slowing rate of growth near the end of the short-range period.
The portion of OASI income that is not needed to meet day-to-day expenditures is used to purchase financial securities, generally special public-debt obligations of the U.S. Government. The cash used to make these purchases flows to the General Fund of the Treasury. Interest on these securities is credited to the trust fund and, when the securities mature, they are reinvested in new securities if not immediately needed to pay program costs. When securities are redeemed prior to maturity in order to pay program costs, general fund revenue flows to the trust fund.
2. Operations of the DI Trust Fund
The estimated operations and financial status of the DI Trust Fund during calendar years 2011-20 under the three sets of assumptions are shown in table IV.A2, together with values for actual experience during 2006-10. Income is projected to increase steadily after 2010 under each alternative, due to most of the same factors described previously in connection with the OASI Trust Fund. DI costs are projected to grow at an even faster pace than income for reasons explained in greater detail below. As a result, DI Trust Fund assets are projected to continue to decrease in 2011 under each alternative, after reaching a maximum in 2008. Under the low-cost assumptions, assets would begin to increase again after reaching a low point in 2016. Under the intermediate assumptions, assets would continue to decline until their projected exhaustion in 2018. Under the high-cost assumptions, DI assets would decline steadily until exhaustion in 2016.
Table IV.A2.—Operations of the DI Trust Fund, Calendar Years 2006-20 a
[Dollar amounts in billions]
Calendar
year Income
Cost
Assets
Total
Net pay-
roll tax contri-
butions
GF
reim-
burse-
mentsb
Taxa-
tion of
benefits
Net
interest Total
Benefit
pay-
ments
Admin-
istra-
tive
costs
RRB
inter-
change
Net
increase
during
year
Amount
at end
of year
Trust
fund
ratio c Historical data:
2006
$102.6
$90.8
d
$1.2
$10.6
$94.5
$91.7
$2.3
$0.4
$8.2
$203.8
207
2007
109.9
95.2
d
1.4
13.2
98.8
95.9
2.5
.4
11.1
214.9
206
2008
109.8
97.6
d
1.3
11.0
109.0
106.0
2.5
.4
.9
215.8
197
2009
109.3
96.9
d
2.0
10.5
121.5
118.3
2.7
.4
-12.2
203.5
178
2010
104.0
92.5
$0.4
1.9
9.3
127.7
124.2
3.0
.5
-23.6
179.9
159
Intermediate:
2011
107.0
82.0
15.3
1.8
7.9
132.8
129.3
3.0
.4
-25.8
154.1
136
2012
114.0
104.6
.7
2.1
6.6
139.0
135.3
3.2
.5
-25.0
129.1
111
2013
118.7
110.9
d
2.5
5.3
143.8
140.0
3.3
.5
-25.1
104.0
90
2014
124.2
117.2
d
3.0
4.1
148.8
144.9
3.5
.4
-24.6
79.4
70
2015
129.7
123.5
d
3.2
3.1
153.8
149.7
3.7
.4
-24.1
55.4
52
2016
135.5
130.0
d
3.5
2.0
159.2
155.0
3.9
.4
-23.7
31.6
35
2017
141.2
136.5
d
3.8
.9
165.1
160.7
4.1
.4
-23.9
7.7
19
2018
e
143.5
—
4.1
e
171.7
167.0
4.3
.3
e
e
5
2019
e
150.2
—
4.4
e
179.5
174.6
4.6
.3
e
e
e
2020
e
156.9
—
4.7
e
187.9
182.8
4.8
.3
e
e
e
Low-cost:
2011
107.3
82.2
15.4
1.8
7.9
130.5
127.1
3.0
.4
-23.2
156.7
138
2012
115.5
105.9
.7
2.0
6.9
134.7
131.0
3.2
.5
-19.2
137.5
116
2013
121.2
112.8
d
2.4
6.0
137.0
133.2
3.3
.5
-15.8
121.7
100
2014
127.7
119.7
d
2.8
5.3
139.0
135.1
3.5
.4
-11.3
110.4
88
2015
134.1
126.4
d
2.9
4.8
141.0
137.0
3.7
.4
-6.9
103.5
78
2016
140.8
133.1
d
3.1
4.6
143.6
139.4
3.8
.4
-2.8
100.7
72
2017
147.4
139.5
d
3.4
4.6
147.0
142.6
4.1
.4
.4
101.1
68
2018
154.7
146.2
—
3.6
4.9
151.0
146.5
4.3
.3
3.6
104.7
67
2019
161.8
152.7
—
3.8
5.3
155.6
150.8
4.5
.3
6.3
111.0
67
2020
169.0
159.1
—
4.0
5.8
160.3
155.3
4.7
.3
8.7
119.7
69
High-cost:
2011
106.6
81.7
15.2
1.8
7.8
135.1
131.7
3.0
.4
-28.5
151.4
133
2012
112.4
103.3
.7
2.1
6.3
144.0
140.3
3.2
.5
-31.6
119.7
105
2013
116.9
109.6
d
2.7
4.6
151.9
148.1
3.4
.5
-35.0
84.8
79
2014
122.0
115.8
d
3.2
3.0
160.3
156.3
3.5
.5
-38.3
46.4
53
2015
127.2
122.5
d
3.5
1.2
169.2
165.0
3.8
.4
-42.0
4.4
27
2016
e
129.7
d
3.9
e
178.7
174.3
4.0
.4
e
e
2
2017
e
137.1
d
4.4
e
188.8
184.2
4.3
.4
e
e
e
2018
e
144.7
—
4.8
e
199.6
194.7
4.5
.4
e
e
e
2019
e
152.2
—
5.2
e
211.2
206.1
4.8
.3
e
e
e
2020
e
159.6
—
5.6
e
223.9
218.5
5.1
.3
e
e
e
a
A detailed description of the components of income and cost, along with complete historical values, is presented in appendix A.
b
Includes reimbursements from the General Fund of the Treasury to the DI Trust Fund for: (1) the cost of noncontributory wage credits for military service before 1957; (2) the cost of payroll tax credits provided to employees in 1984 and self-employed persons in 1984-89 by Public Law 98-21; (3) the cost in 2009-17 of excluding certain self-employment earnings from SECA taxes under Public Law 110-246; and (4) payroll tax revenue forgone under the provisions of Public Laws 111-147 and 111-312.
c
The “Trust fund ratio” column represents assets at the beginning of a year (which are identical to assets at the end of the prior year shown in the “Amount at end of year” column) as a percentage of cost for the year.
d
Less than $50 million.
e
The DI Trust Fund is projected to become exhausted in 2018 and 2016 under the intermediate and the high-cost assumptions, respectively. Accordingly, certain trust fund operation values from the year of trust fund exhaustion through 2020 are not meaningful under present law and are not shown in this table.year.
Note: Totals do not necessarily equal the sums of rounded components.
Future DI cost is estimated to increase in part due to increases in average benefit levels resulting from: (1) automatic benefit increases; and (2) projected increases in the amounts of average monthly earnings on which benefits are based. In addition, the number of DI beneficiaries in current-payment status is projected to generally increase during the short-range projection period. Over the period 2010-20, the projected annual average growth rate in the number of DI disabled-worker beneficiaries is roughly 0.5, 1.6, and 2.7 percent under alternatives I, II, and III, respectively. Growth is largely attributable to the gradual progression of the baby-boom generation through ages 50 to normal retirement age (NRA), at which ages higher rates of disability prevalence are experienced. The estimates under all three sets of assumptions anticipate additional growth in the numbers of disabled-worker beneficiaries due to a projected sharp, but temporary, increase in incidence rates to levels comparable to some of the highest ever experienced under the DI program. These increases are projected to result from the economic recession. The projected higher levels of disability incidence are expected to subside as the economy recovers, and to return to levels consistent with longer term trends in incidence rates.3
The proportion of disabled-worker beneficiaries whose benefits terminate or convert to retirement benefits in a given year has also fluctuated in the past. Over the last 20 years, the rates of benefit termination due to death have declined very gradually, and generally mirror the improving mortality experience for the overall population. The proportion of disabled worker beneficiaries converting to retirement benefits at attainment of NRA also declined gradually through 2008 due to the relatively low average age of new beneficiaries coming on the rolls during the 1990s, along with the effects over the period 2003-08 of the gradual increase in the NRA to age 66. After 2008, the conversion proportion returned to pre-2003 levels as an 11-year period began where the NRA remains at age 66 before beginning to increase again. Furthermore, starting in 2012, the conversion proportion will increase sharply as the baby boom cohorts begin to reach NRA.
The termination rate due to recovery has been much more volatile. Currently, the proportion of disabled beneficiaries whose benefits cease because of their recovery from disability is very low in comparison to levels experienced throughout the 1970s and early 1980s. Projected rates of recovery terminations in this year’s report are temporarily elevated in years 2013-15 due to an assumed increase in funding for the purpose of reducing the backlog of continuing disability reviews (CDRs), although it is not clear that Congress will provide the level of funding necessary to reduce this backlog. Following this temporary increase in CDRs, recovery termination rates are projected to return to levels consistent with: (1) projected levels of work terminations; and (2) the assumption that terminations for medical improvement will be consistent with continued timely completion of CDRs after 2015. The overall proportion of disabled workers leaving the DI rolls (reflecting all causes) is projected to generally increase due to the aging of the beneficiary population.
At the beginning of calendar year 2010, the assets of the DI Trust Fund represented 159 percent of annual expenditures. During 2010, DI expenditures exceeded income, and the trust fund ratio for the beginning of 2011 decreased to about 136 percent. Under the intermediate set of assumptions, expenditures are estimated to exceed total income throughout the short-range projection period. The projected expenditures in excess of income result in the estimated exhaustion of the DI Trust Fund by the end of 2018.
Under the low-cost assumptions, the trust fund ratio would decrease to a low of 67 percent at the beginning of 2018 before increasing to 69 percent at the beginning of 2020. Under the high-cost assumptions, the assets of the DI Trust Fund would decline steadily, and dip below the level of annual expenditures during 2012 before becoming completely depleted in 2016.
Although assets of the DI Trust Fund were greater than annual expenditures at the beginning of 2011, under all three alternatives the DI Trust Fund does not satisfy the Trustees’ short-range test of financial adequacy. Furthermore, the DI Trust Fund is projected to be exhausted by the end of 2018 and 2016 under alternatives II and III, respectively.
3. Operations of the Combined OASI and DI Trust Funds
The estimated operations and status of the combined OASI and DI Trust Funds during calendar years 2011-20 for the three alternatives are shown in table IV.A3, together with figures on actual experience in 2006‑10. With income and cost for the OASI Trust Fund representing over 80 percent of the corresponding amounts for the combined OASI and DI Trust Funds, the operations of the OASI Trust Fund tend to dominate the combined operations of the two funds. Consequently, based on the strength of the OASI Trust Fund over the next 10 years, the combined OASI and DI Trust Funds meet the requirements of the short-range test of financial adequacy under all three alternative sets of assumptions.
Table IV.A3.—Operations of the Combined OASI and DI Trust Funds,
Calendar Years 2006-20 a [Dollar amounts in billions]
Calendar
year Income
Cost
Assets
Total
Net pay-
roll tax contri-
butions
GF
reim-
burse-
mentsb
Taxa-
tion of
benefits
Net
interest Total
Benefit
pay-
ments
Admin-
istra-
tive
costs
RRB
inter-
change
Net
increase
during
year
Amount
at end
of year
Trust
fund
ratio c Historical data:
2006
$744.9
$625.6
d
$16.9
$102.4
$555.4
$546.2
$5.3
$3.8
$189.5
$2,048.1
335
2007
784.9
656.1
d
18.6
110.2
594.5
584.9
5.5
4.0
190.4
2,238.5
345
2008
805.3
672.1
d
16.9
116.3
625.1
615.3
5.7
4.0
180.2
2,418.7
358
2009
807.5
667.3
d
21.9
118.3
685.8
675.5
6.2
4.1
121.7
2,540.3
353
2010
781.1
637.3
$2.4
23.9
117.5
712.5
701.6
6.5
4.4
68.6
2,609.0
357
Intermediate:
2011
807.7
564.7
105.4
22.7
114.9
738.4
727.3
6.7
4.4
69.3
2,678.2
353
2012
866.8
720.7
5.0
25.0
116.1
772.0
760.3
7.1
4.5
94.8
2,773.0
347
2013
915.1
763.9
d
30.5
120.7
813.8
802.1
7.2
4.5
101.3
2,874.3
341
2014
969.9
807.2
d
35.9
126.8
860.5
848.5
7.4
4.6
109.4
2,983.7
334
2015
1,023.4
850.5
d
39.5
133.3
911.0
898.6
7.7
4.7
112.4
3,096.1
328
2016
1,079.0
895.6
d
43.5
139.8
964.8
952.4
8.0
4.4
114.1
3,210.2
321
2017
1,135.1
940.2
d
47.9
147.0
1,023.1
1,009.8
8.3
5.0
112.0
3,322.2
314
2018
1,196.0
988.2
—
51.7
156.1
1,086.9
1,073.2
8.7
5.1
109.1
3,431.3
306
2019
1,255.4
1,034.6
—
56.0
164.8
1,160.6
1,146.3
9.1
5.2
94.8
3,526.1
296
2020
1,313.4
1,080.5
—
60.7
172.2
1,240.4
1,225.6
9.4
5.4
73.0
3,599.1
284
Low-cost:
2011
809.9
566.4
105.9
22.7
115.0
735.9
724.8
6.7
4.4
74.1
2,683.0
355
2012
876.0
729.4
5.1
24.9
116.7
766.5
754.9
7.1
4.5
109.5
2,792.5
350
2013
929.3
776.9
d
30.2
122.2
802.1
790.5
7.2
4.5
127.2
2,919.7
348
2014
989.3
824.4
d
35.3
129.6
840.9
829.0
7.4
4.5
148.3
3,068.0
347
2015
1,047.6
870.9
d
38.5
138.1
882.9
870.6
7.6
4.6
164.7
3,232.7
348
2016
1,106.0
916.6
d
42.1
147.3
928.3
916.1
7.9
4.3
177.7
3,410.4
348
2017
1,164.4
960.7
d
46.1
157.6
979.0
966.0
8.2
4.8
185.4
3,595.8
348
2018
1,226.6
1,007.0
—
49.5
170.0
1,033.8
1,020.3
8.6
4.9
192.8
3,788.6
348
2019
1,287.8
1,052.1
—
53.1
182.6
1,093.3
1,079.4
8.9
5.0
194.5
3,983.1
347
2020
1,347.9
1,096.2
—
56.9
194.8
1,156.5
1,142.1
9.2
5.1
191.4
4,174.5
344
High-cost:
2011
805.2
563.0
104.7
22.7
114.7
741.1
730.0
6.7
4.4
64.1
2,673.1
352
2012
857.4
711.4
5.0
25.2
115.8
780.8
769.1
7.1
4.5
76.6
2,749.7
342
2013
906.4
755.2
d
31.1
120.1
831.0
819.2
7.2
4.6
75.4
2,825.2
331
2014
960.4
797.8
d
36.9
125.7
888.8
876.6
7.5
4.7
71.6
2,896.8
318
2015
1,016.0
843.6
d
41.1
131.3
952.6
940.0
7.8
4.8
63.4
2,960.2
304
2016
1,076.2
893.6
d
45.9
136.7
1,023.0
1,010.2
8.2
4.6
53.2
3,013.4
289
2017
1,137.7
944.6
d
51.2
142.0
1,099.4
1,085.6
8.6
5.2
38.3
3,051.7
274
2018
1,199.6
996.9
—
56.0
146.7
1,183.1
1,168.6
9.0
5.4
16.6
3,068.3
258
2019
1,259.2
1,048.3
—
61.2
149.7
1,275.4
1,260.2
9.5
5.7
-16.1
3,052.1
241
2020
1,316.5
1,099.2
—
66.9
150.3
1,377.1
1,361.3
9.9
5.9
-60.7
2,991.5
222
a
A detailed description of the components of income and cost, along with complete historical values, is presented in appendix A.
b
Includes reimbursements from the General Fund of the Treasury to the OASI and DI Trust Funds for: (1) the cost of noncontributory wage credits for military service before 1957; (2) the cost of benefits to certain uninsured persons who attained age 72 before 1968; (3) the cost of payroll tax credits provided to employees in 1984 and self-employed persons in 1984-89 by Public Law 98-21; (4) the cost in 2009-17 of excluding certain self-employment earnings from SECA taxes under Public Law 110-246; and (5) payroll tax revenue forgone under the provisions of Public Laws 111-147 and 111-312.
c
The “Trust fund ratio” column represents assets at the beginning of a year (which are identical to assets at the end of the prior year shown in the “Amount at end of year” column) as a percentage of cost for the year.
d
Less than $50 million.
Note: Totals do not necessarily equal the sums of rounded components.
While this analysis permits an assessment of the short-range test for the two programs on a combined basis, in practice one trust fund cannot share assets with another trust fund without legislative changes to the Social Security Act. For example, under the intermediate scenario, table IV.A2 shows that the DI Trust Fund becomes exhausted in 2018. Nevertheless, considering the OASI and DI Trust Funds together demonstrates that, on a combined basis, a legislative change would allow sufficient assets to be available to pay all benefits through the end of the short-range period.
4. Factors Underlying Changes in 10-Year Trust Fund Ratio Estimates From the 2010 Report
The factors underlying the changes in the intermediate estimates for the OASI, DI, and the combined funds from last year’s report to this report are analyzed in table IV.A4.
In the 2010 report, the trust fund ratio for OASI was estimated to reach 366 percent at the beginning of 2019 — the tenth projection year from that report. Based on the change in the short-range valuation period alone, from 2010‑19 to 2011‑20, the estimated ratio for the tenth year (now 2020) would be 10 percentage points lower, or 356 percent. Changes to reflect legislation enacted since last year’s report, the latest actual data, adjustments to the assumptions for future years, and changes in projection methods further reduce the ratio for the tenth projection year (2020) to 339 percent.
Public Law 111-312 (The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010) included a temporary two-year extension of lower Federal income tax rates that had been scheduled through tax year 2010. This provision is projected to decrease revenue due to the effect on the taxation of Social Security benefits over the next two years, with a cumulative effect of reducing the OASI trust fund ratio for 2020 by 1 percentage point. This law also reduced the OASDI payroll tax rate for 2011 by 2 percentage points for employees and for self-employed workers, and provided for reimbursements from the General Fund of the Treasury to the OASI and DI Trust Funds to make up for this reduction in payroll tax revenue. This provision has no effect on trust fund assets or the trust fund ratio. A second piece of legislation enacted in 2010, Public Law 111‑240 (The Small Business Jobs Act of 2010), provided for a temporary deduction of family health insurance costs in the computation of self-employment earnings for business owners. The legislation is estimated to decrease OASI SECA tax collections by slightly more than $1 billion in 2011, but this one-time reduction in SECA collections has a negligible effect on the OASI trust fund ratio for 2020.
The net effect of changes in demographic assumptions over the short-range period resulted in a reduction in the tenth-year trust fund ratio of 7 percentage points. The cumulative net effects of changes in economic data and assumptions, which reflects revised estimates of the effects of the economic recession that started in December 2007, resulted in a reduction in the trust fund ratio of 13 percentage points by the beginning of 2020. An increase in the 2020 trust fund ratio of 5 percentage points resulted from the combined effects of incorporating recent programmatic data including the numbers of beneficiaries, amount of benefit payments, and administrative expenses. Finally, there were several relatively minor changes in the short-range projection methodology since the 2010 report. The most important of these changes was an improvement in the data and methods used to estimate the growth rates of average benefit amounts awarded over the projection period. The combined effect of the various methodological improvements on the ending trust fund ratio was negligible.
Corresponding estimates of the factors underlying the changes in the financial projections for the DI Trust Fund, and for the OASI and DI Trust Funds combined, are also shown in table IV.A4. The ratios at the beginning of 2019 (shown in last year’s report) and 2020 (shown in this report) for the DI Trust Fund and the OASI and DI Trust Funds combined under the intermediate assumptions are theoretical because the DI Trust Fund is projected to be depleted during 2018 in both reports. The 20 percentage point decrease in the DI trust fund ratio by the beginning of 2020 (compared with the ratio at the beginning of 2019 in last year’s report) is largely caused by the change in the valuation period, as well as updates to economic data and assumptions that account for continuing effects of the economic downturn that began in December 2007. The remainder of the change results from the combined effects of enactments of Public Laws 111‑240 and 111-312, demographic changes, and the incorporation of recent programmatic data.
Table IV.A4.—Reasons for Change in Trust Fund Ratios at the Beginning
of the Tenth Year of Projection [In percent]
Item
OASI
Trust Fund
DI
Trust Fund
OASI and DI
Trust Funds,
combined Trust fund ratio shown in last year’s report for calendar year 2019a
366
-3
309
Change in trust fund ratio due to changes in:
Legislation
-1
-1
-1
Valuation period
-10
-14
-10
Demographic data and assumptions
-7
1
-6
Economic data and assumptions
-13
-12
-13
Programmatic data and assumptions
5
6
5
Projection methods and data
b
b
b
Total change in trust fund ratio
-27
-20
-25
Trust fund ratio shown in this report for calendar year 2020 a
339
-23
284
a
Figures for DI, and OASI and DI combined, are theoretical because of the depletion of the DI trust fund in 2018.
b
Between -0.5 and 0.5 percent.
Note: Totals do not necessarily equal the sums of rounded components.
1
The estimates shown in this subsection reflect 12 months of benefit payments in each year of the short-range projection period. In practice, the actual payment dates have at times shifted over calendar year boundaries as a result of the statutory requirement that benefit checks be delivered early when the normal check delivery date is a Saturday, Sunday, or legal public holiday. The annual benefit figures are shown as if those benefit checks were delivered on the usual date.
2
Note that the pattern, by alternative, of these nominal amounts of total taxable earnings may not be as expected because of the varying inflation assumptions embedded in the respective estimates.
3
Historical and projected patterns of disability incidence rates are described in greater detail in section V.C.6.
SSA Home | Privacy Policy | Website Policies & Other Important Information | Site Map | Actuarial Publications
No comments:
Post a Comment