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Summary Measures and Graphs

Description of Proposed Provision:
G1: Invest 40 percent of the OASDI Trust Fund reserves in equities (phased in 2018-2032), assuming an ultimate 6.2 percent annual real rate of return on equities.

Estimates based on the intermediate assumptions of the 2017 Trustees Report

Summary Measures
Current law
[percent of payroll]
Change from current law
[percent of payroll]
Shortfall eliminated
Long-range
actuarial
balance
Annual
balance in
75th year
Long-range
actuarial
balance
Annual
balance in
75th year
Long-range
actuarial
balance
Annual
balance in
75th year
-2.83 -4.48 0.53* 0.00 * 0%


graph of OASDI cost rates and income rates by year, under
                 current law and provision. click on graph to view underlying
                 data. graph of OASDI trust fund ratio by year, under current law
                 and provision. click on graph to view underlying data.
* A change in the investment of trust fund reserves to include some equities affects the size of all summarized measures because increased "present-value" discounting reduces the weight on values for more distant future years. As a result, the magnitude of the current-law actuarial balance and the summarized effects of most proposals is reduced. Therefore, the size of the change in the long-range actuarial balance indicated here cannot be interpreted directly as a reduction in the shortfall. The actual reduction in the shortfall from equity investment depends on the amount of reserves that are available for investment throughout the period. For example, if provisions to change revenue or scheduled benefits resulted in a purely pay-as-you-go system (reserves just above zero throughout the period), then investment in equities would have no effect on the actuarial balance.
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Last reviewed or modified July 13, 2017