Academic journal article Social Security Bulletin

Executive Summaries of the Technical Panel Reports

Academic journal article Social Security Bulletin

Executive Summaries of the Technical Panel Reports

Article excerpt

In the Fall 1994 issue, we reported on the two technical panels that would assist the 1994-95 Advisory Council on Social Security in making recommendations in the areas of trends and issues in retirement savings, and the assumptions and methods used to project the financial status of the Social Security program. Included here are the Executive Summaries of the final reports submitted to the Council.

Technical Panel on Trends and Issues in Retirement Saving

The charge of the Technical Panel on Trends and Issues in Retirement Savings (TIRS) was to "assist the 1994-95

Social Security

Advisory Council with respect to its charge to analyze the relative roles of the public and private sectors in the provision of retirement income, particularly how underlying policies of public and private programs, including relevant tax laws, affect retirement decisions and the economic status of the elderly." The Panel met in Washington, DC for nine sessions, including two presentations before the Advisory Council, and then produced this Report.

Introduction

The Social Security system is not in long-term actuarial balance. The Social Security Trustees, using their intermediate assumptions, project that currently legislated Old-Age, Survivors, and Disability Insurance (OASDI) tax revenues will be less than currently legislated benefits after the year 2013. Projected benefits begin to exceed the sum of OASDI taxes and interest earned in 2020, resulting in a decline in the OASDI Trust Funds, and projected depletion in 2030. Over the 75-year long-range planning horizon, the difference between the projected income and cost flows is a deficit equal to an annual 2.17 percent of taxable payrolls. Some combination of benefit decreases and/or revenue increases will be required to close this gap.

In addition to these Social Security retirement and disability program concerns, much more immediate funding problems exist with the Hospital Insurance component of Medicare, whose Trust Fund is projected to run out in 2002. Moreover, Congressional Budget Office analysis of the President's proposed budget for fiscal year 1996 projects continued Federal budget deficits through the year 2000. It is in this context that the Technical Panel on Trends and Issues in Retirement Savings discusses various Social Security options below.

The Executive Summary begins with a section on current and projected trends in labor markets, employer pensions, savings, and the well-being of the elderly. The Summary then discusses policy options designed to deal with projected Social Security fiscal imbalances, as well as selected other proposals to improve the economic well-being of future retirees. The Summary includes other conclusions and suggestions that the Panel thought were useful to convey to the Advisory Council on Social Security and to the public at large.

The Panel did not seek consensus; rather, its charge was to develop evaluation criteria and to use them to discuss a range of policy options. The Panel discussed both incremental and wide-ranging changes in Social Security and related programs, changes designed to alleviate both Social Security's long-run fiscal deficit and the broader problem of potentially inadequate retirement income for future generations of retirees. On many of the issues discussed, Panel members were not unanimous, although on some issues they did all agree. Available evidence and supporting arguments are contained in the body of the Final Report.

Some topics were beyond the Panel's charge and therefore are not discussed in detail in the Report. One topic is the central role of the Nation's overall economic health, which has a major impact on the Social Security system's fiscal health. To the degree that Social Security encourages, or at least does not discourage, work and savings, it enhances the prospects for economic growth. The Panel also did not examine how changes in the medical care and health insurance markets will interact with the Medicare and Disability Insurance programs. …

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