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Summary of Provisions That Would Change the Social Security Program

Description of Proposed Provisions:
Provisions Affecting Level of Monthly Benefits (PIA)

Estimates based on the intermediate assumptions of the 2009 Trustees Report

  Change from present law Results with this provision
Long-range
actuarial
balance
Annual
balance in
75th year
Long-range
actuarial
balance
Annual
balance in
75th year
Present Law, Alternative II.
-2.00 -4.34
B1.1 Beginning with those newly eligible for OASDI benefits in 2016 and later, reduce PIA formula factors so that benefits grow by inflation rather than by increases in real wages.
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2.28 7.16 0.27 2.82
B1.2 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2016. Create new bend point at the 30th percentile of earners. Maintain current-law benefits for earners at the 30th percentile and below and reduce upper 2 formula factors (32% and 15%) such that maximum worker benefit grows by inflation rather than the growth in average wages.
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1.31 3.97 -0.69 -0.37
B1.3 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2016. Create new bend point at the 40th percentile of earners. Maintain current-law benefits for earners at the 40th percentile and below and reduce upper 2 formula factors (32% and 15%) such that maximum worker benefit grows by inflation rather than the growth in average wages.
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1.10 3.32 -0.90 -1.02
B1.4 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2016. Create new bend point at the 50th percentile of earners. Maintain current-law benefits for earners at the 50th percentile and below and reduce upper 2 formula factors (32% and 15%) such that maximum worker benefit grows by inflation rather than the growth in average wages.
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0.87 2.51 -1.13 -1.83
B1.5 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2016. Create new bend point at the 60th percentile of earners. Maintain current-law benefits for earners at the 60th percentile and below and reduce upper 2 formula factors (32% and 15%) such that maximum worker benefit grows by inflation rather than the growth in average wages.
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0.61 1.57 -1.39 -2.77
B1.6 (2013) Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2013. Create new bend point at the 30th percentile of earners. Maintain current-law benefits for earners at the 30th percentile and below and reduce upper 2 formula factors (32% and 15%) such that maximum worker benefit grows by inflation rather than the growth in average wages. Disability benefits are not affected by the proposal. Disabled worker beneficiaries, upon attaining normal retirement age, would be subject to a proportional reduction in benefits based on the worker's years of disability. In addition, the reduction to the upper 2 formula factors is suspended for any year in which sustainable solvency over the next 75 years is expected. With this provision taken alone, suspension is not expected within the next 75 years.
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1.31 3.64 -0.69 -0.70
B1.6 (2016) Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2016. Create new bend point at the 30th percentile of earners. Maintain current-law benefits for earners at the 30th percentile and below and reduce upper 2 formula factors (32% and 15%) such that maximum worker benefit grows by inflation rather than the growth in average wages. Disability benefits are not affected by the proposal. Disabled worker beneficiaries, upon attaining normal retirement age, would be subject to a proportional reduction in benefits based on the worker's years of disability.
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1.14 3.46 -0.86 -0.88
B1.6 (2017) Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2017. Create new bend point at the 30th percentile of earners. Maintain current-law benefits for earners at the 30th percentile and below and reduce upper 2 formula factors (32% and 15%) such that maximum worker benefit grows by inflation rather than the growth in average wages. Disability benefits are not affected by the proposal. Disabled worker beneficiaries, upon attaining normal retirement age, would be subject to a proportional reduction in benefits based on the worker's years of disability.
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1.10 3.42 -0.90 -0.92
B1.6 (2018) Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2018. Create new bend point at the 30th percentile of earners. Maintain current-law benefits for earners at the 30th percentile and below and reduce upper 2 formula factors (32% and 15%) such that maximum worker benefit grows by inflation rather than the growth in average wages. Disability benefits are not affected by the proposal. Disabled worker beneficiaries, upon attaining normal retirement age, would be subject to a proportional reduction in benefits based on the worker's years of disability.
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1.04 3.36 -0.96 -0.98
B2.1 (2019) For OASI beneficiaries becoming eligible for benefits in 2019 and later, multiply the PIA factors by the ratio of life expectancy at 67 for 2014 to the life expectancy at age 67 for the 4th year prior to the year of benefit eligibility. Unisex life expectancies, based on period life tables, would be used as projected by SSA's Office of the Chief Actuary. Disability benefits are not affected by the proposal. Disabled worker beneficiaries, upon attaining normal retirement age, would be subject to a proportional reduction in benefits based on the worker's years of disability.
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0.56 1.93 -1.44 -2.41
B2.1 (2022) For OASI beneficiaries becoming eligible for benefits in 2022 and later, multiply the PIA factors by the ratio of life expectancy at 67 for 2017 to the life expectancy at age 67 for the 4th year prior to the year of benefit eligibility. Unisex life expectancies, based on period life tables, would be used as projected by SSA's Office of the Chief Actuary. Disability benefits are not affected by the proposal. Disabled worker beneficiaries, upon attaining normal retirement age, would be subject to a proportional reduction in benefits based on the worker's years of disability.
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0.49 1.81 -1.51 -2.53
B3.1 For each year from 2010-2040, multiply the 32 and 15 percent formula factors by 0.987, reducing the factors to 21 percent and 10 percent respectively, for new eligibles in 2040 and later.
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1.51 2.94 -0.49 -1.40
B3.2 Beginning with those newly eligible in 2017, multiply the 90 and 32 PIA factors each year by 0.9925 and 0.982, respectively. Stop reductions in 2054. Beginning with those newly eligible in 2012, multiply the 15 factor by 0.982. Stop reduction of the 15 factor in 2049. DI will have present law scheduled benefit and proportional reduction at conversion to retired worker benefits at normal retirement age, based on years of disability.
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2.03 5.31 0.03 0.96
B3.3 For all individuals becoming eligible for OASDI benefits in 2010 and later, use a modified primary insurance amount (PIA) formula. The modified formula would increase the first bend point to $800 in 2009. Also, a new bend point would be placed between the reset first bend point and the current-law second bend point. The new bend point would be equal to the reset first bend point plus 75 percent of the difference between the bend points. The PIA formula factor between the new bend point and the upper bend point would be lowered from 32% to 20%. The PIA formula factor above the upper bend point would be lowered from 15% to 10%.
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0.23 0.29 -1.77 -4.05
B3.4 Multiply all PIA formula factors successively by 0.991 for new benefit eligibility in each year 2013 through 2041. Disabled workers and young survivors (surviving spouses with a child-in-care and survivor children) would not be affected by this provision. Upon conversion from disabled worker to retired worker benefits, benefit levels would be proportionally reduced based on the fraction of years the individual was not disabled between ages 22 and 62.
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1.45 3.11 -0.56 -1.23
B3.5 Progressive indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2012, continuing through 2049, and resuming in 2070. Create new bend point at the 30th percentile of earners. Maintain current-law benefits for earners at the 30th percentile and below and reduce upper 2 formula factors (32% and 15%) such that maximum worker benefit is reduced by 1.1 percent per year as compared to current law, for the years that progressive indexing applies. Disability benefits are not affected by the proposal. Disabled worker beneficiaries, upon attaining normal retirement age, would be subject to a proportional reduction in benefits based on the worker's years of disability.
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1.25 2.90 -0.76 -1.44
B3.6 Progressive indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2012 through 2061. Create new bend point at the 30th percentile of earners. Maintain current-law benefits for earners at the 30th percentile and below and reduce upper 2 formula factors (32% and 15%) such that maximum worker benefit is reduced by 1.1 percent per year as compared to current law, for the years that progressive indexing applies. Disability benefits are not affected by the proposal. Disabled worker beneficiaries, upon attaining normal retirement age, would be subject
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1.34 3.33 -0.66 -1.01
B3.7 Progressive indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2012, continuing through 2021, and then resuming in 2060. Create new bend point at the 30th percentile of earners. Maintain current-law benefits for earners at the 30th percentile and below and reduce upper 2 formula factors (32% and 15%) such that maximum worker benefit is reduced by 1.1 percent per year as compared to current law, for the years that progressive indexing applies. Disability benefits are not affected by the proposal. Disabled worker beneficiaries, upon attaining normal retirement age, would be subject to a proportional reduction in benefits based on the worker's years of disability.
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0.63 1.59 -1.38 -2.76
B4.1 Increase the number of years used to calculate benefits for retirees and survivors (but not for disabled workers) from 35 to 38, phased in 2010-2014.
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0.29 0.43 -1.71 -3.91
B4.2 Increase the number of years used to calculate benefits for retirees and survivors (but not for disabled workers) from 35 to 40, phased in 2010-2018.
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0.46 0.72 -1.54 -3.62
B4.3 Eliminate dropout years for OASI and DI computation of primary insurance amount (PIA) for individuals newly eligible for benefits from 2011 to 2019. Specifically, for OASDI benefit computation, reduce the maximum number of drop-out years from 5 for benefit eligibility in 2010, with a decrease of 1 computation year in 2011, 2013, 2015, 2017, and 2019.
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0.63 1.02 -1.37 -3.32
B5.1 (2017) Increase the PIA to a level such that a worker with 30 years of earnings at the minimum wage level would receive an adjusted PIA equal to 120 percent of the Federal poverty level for an aged individual. This provision would take full effect for all newly eligible OASDI workers in 2026, and would be phased in for new eligible in 2017 through 2025. The percentage increase in PIA would be lowered proportionately for those with fewer than 30 years of earnings, down to no enhancement for workers with 20 or fewer years of earnings. (Year-of-work requirements are "scaled" for disabled workers based on their years of potential work from age 22 to benefit eligibility). The benefit enhancement percentage would be reduced proportionately for workers with higher average indexed monthly earnings (AIME), down to no enhancement for those with AIME at least twice that of a 35-year steady minimum wage earner.
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-0.04 0.00 -2.04 -4.34
B5.1 (2018) Increase the PIA to a level such that a worker with 30 years of earnings at the minimum wage level would receive an adjusted PIA equal to 120 percent of the Federal poverty level for an aged individual. This provision would take full effect for all newly eligible OASDI workers in 2027, and would be phased in for new eligible in 2018 through 2026. The percentage increase in PIA would be lowered proportionately for those with fewer than 30 years of earnings, down to no enhancement for workers with 20 or fewer years of earnings. (Year-of-work requirements are "scaled" for disabled workers based on their years of potential work from age 22 to benefit eligibility). The benefit enhancement percentage would be reduced proportionately for workers with higher average indexed monthly earnings (AIME), down to no enhancement for those with AIME at least twice that of a 35-year steady minimum wage earner.
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-0.04 0.00 -2.04 -4.34
B5.2 Beginning in 2010, increase the special minimum benefit by making the following changes: (a) A year of coverage is defined as a year in which 4 quarters of coverage are earned. (b) At implementation, set the PIA for 30 years of coverage equal to 125 percent of the monthly poverty level (about $1,128 in 2009). The PIA per year of coverage (after the first 10 years) would be $1,128/20 = $56.40. (c) Index the initial PIA per year of coverage by wage growth for successive cohorts, so that the special minimum keeps up with the wage-indexed benefit formula.
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-0.13 -0.19 -2.13 -4.53
B5.3 Beginning in 2010, increase the special minimum benefit by making the following changes: (a) A year of coverage is defined to be either a childcare year or a year in which 4 quarters of coverage are earned. Childcare years are granted to parents who have a child under 5, with a limit of 8 such years. (b) At implementation, set the PIA for 30 years of coverage equal to 125 percent of the monthly poverty level (about $1,128 in 2009). The PIA per year of coverage (after the first 10 years) would be $1,128/20 = $56.40. (c) Index the initial PIA per year of coverage by wage growth for successive cohorts, so that the special minimum keeps up with the wage-indexed benefit formula.
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-0.26 -0.36 -2.26 -4.70
B6.1 Reduce benefits by 3 percent for those newly eligible for benefits in 2010 and later.
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0.36 0.50 -1.64 -3.84
B6.2 Reduce benefits by 5 percent for those newly eligible for benefits in 2010 and later.
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0.61 0.84 -1.39 -3.50
B6.3 Give parents earnings credits for up to five years if they have a child under 6. The earnings credited for a childcare year would be such that the resulting earnings assigned to the parents would equal one half of the Social Security average-wage index -- about $21,021 in 2009. The credits would be available for all past years to newly eligible retired-worker and disabled-worker beneficiaries in 2010 and later. The 5 most advantageous years would be used if more than 5 childcare credit years are possible; that is, the 5 years that make the biggest difference in indexed earnings.
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-0.24 -0.35 -2.24 -4.69
B6.4 Provide a 5 percent increase to the benefit level of any beneficiary who is 85 or older at the beginning of 2010 or who reaches their 85th birthday after the beginning of 2010.
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-0.09 -0.13 -2.09 -4.48
B6.5 Provide the same dollar amount increase to the benefit level of any beneficiary who is 85 or older at the beginning of 2010 or who reaches their 85th birthday after the beginning of 2010. The dollar amount of increase equals 5 percent of the average retired worker benefit in the prior year.
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-0.09 -0.14 -2.09 -4.48
B6.6 Increase benefits by 20 percent for all beneficiaries as of the beginning of 2010 and for those newly eligible for benefits after the beginning of 2010.
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-2.98 -3.34 -4.98 -7.68
B6.7 Increase benefits by 5 percent for all beneficiaries as of the beginning of 2010 and for those newly eligible for benefits after the beginning of 2010.
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-0.75 -0.83 -2.75 -5.17
B6.8 Increase benefits by 2 percent for all beneficiaries as of the beginning of 2010 and for those newly eligible for benefits after the beginning of 2010.
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-0.30 -0.33 -2.30 -4.67
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Last reviewed or modified July 26, 2010