By Steve Kofahl
The Board of Trustees released the Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance (OASI) and Federal Disability Insurance (DI) Trust Funds on July 28, 2014, to the Speaker of the House and the President of the Senate. The Trustees are the Secretaries of Treasury, Labor, and Health & Human Services; the (Acting) Commissioner of Social Security; and two public trustees appointed by the President and confirmed by the Senate.
This year’s Report projected that the OASI Fund reserves will last until 2034, and the DI Fund reserves until 2016. Together, the OASDI Trust Fund reserves are good until 2033, the same projected date as in last year’s Report. Total Trust Fund reserves continue to grow, with growth projected through 2019, and were up to $2.764 trillion at the beginning of this year.
Congress needs to move some OASI reserves to the DI Fund, the kind of adjustment that has been done in the past with little controversy. The Social Security Disability program has been under attack by some in Congress this year, but there is little doubt that the needed adjustment will be made before 2016.
Because there was no change in the projections this year, there was not much controversy about the Report until August 6, when retirement expert Alicia Munnell wrote an article for MarketWatch titled “The case of the missing Social Security data”, and Michael Hiltzik of the LA Times followed-up two days later with “The mystery of the missing Social Security data.” These stories revealed that a Table which had appeared in every Annual report since 1989 was missing.
The missing Table concerns the Social Security benefit replacement rates. Replacement rates had previously been shown for those with earnings characterized as “very low”, “low”, “medium”, “high”, and “maximum.” Social Security benefits are calculated using a progressive formula with those with lower earnings having a higher percentage replaced by Social Security benefits than those with higher earnings. For example, the 2013 information showed that a low earning worker who retires at age 65 will receive about $10, 719 in 2015, replacing 53.2% of earnings, while a high earning worker will receive about $23, 435, replacing 32.7% of earnings. The data is important for use in individual retirement planning, and in guiding public policy regarding national pension plans.
Alicia Munnell views the deletion in 2014 as “the culmination of a concerted effort by a band of critics who argue that…the reported replacement rates grossly understate Social Security’s contribution to retirement income.” Hiltzik says that one of the goals of these critics is to “undermine a growing effort in Congress to increase and expand the program’s benefits.”
On August 19 I dropped-in on SSA’s Chief Actuary, who had responsibility for preparing most of the Report. I asked him why the Table did not appear in the Report. He said that the decision was made by the Trustees, and that he could not share their reason(s).
He pointed out that the missing Table is available at www.socialsecurity.gov/ OACT/NOTES/actnote.html. He also pointed out that the replacement rates are accurate, and meet international actuarial standards. The next day I sent a message to Acting Commissioner Carolyn Colvin, asking why the Table was not included this year. If I get a substantive response, I’ll let you know.
Steve Kofahl is President of AFGE 3937 and a memebr of PSARA’s Executive Board.