Table B--Estimated Long-Range OASDI Financial Effect of a Proposal Developed by Representative Nick Smith
(Assumes 67% worker participation in establishing Personal Retirement Savings Accounts)
Estimated Change in
Long-Range OASDI
Actuarial Balance 1/
(as a percent of payroll)
Raise the normal retirement age by two months per year for those age 62 through 2011, then increase by one month every two years thereafter

Provide a third bend point in 2004 with a factor declining 2 percentage points per year until reaching 5 percent in 2009; index the second and third bend points by the CPI, and gradually phase down the 32, 15 and 5 percent factors. Limit reduction for older OASI workers and near term survivor benefits. Provide for no change from present law for lower-earner disability cases and a minimum benefit for higher-earner disability cases

Reimburse the DI Trust Fund annually for additional payments resulting from guaranteeing present-law benefits for lower earner disabled workers and a specified minimum benefit for higher-earner disabled workers

Transfer the following amounts from the Treasury to the OASDI Trust Funds in fiscal years 2007-2013: $21 billion in 2007, $47 billion in 2008, $78 billion in 2009, $106 billion in 2010, $147 billion in 2011, $184 billion in 2012, and $283 billion in 2013

Beginning in 2005, cover state and local government employees newly hired in 2004 or later

Increase benefit payable to all widowed individuals by 10 percent beginning in 2004

Set the delayed retirement credit to 8 percent for all months after 2004

Provide up to 5 child care dropout years for workers with no earnings who are living with a child under age 13--effective for computation base years after 2004

Beginning in 2003, eliminate the family maximum for disabled children aged 18 or older

Subtotal, benefit provisions (including interaction)

Establish personal retirement savings accounts and specific General Fund transfers:
  • Redirect 2.5 percentage points of taxable payroll in 2005-25, 2.75 percentage points in 2026-2038. After 2038, redirect OASDI income in excess of the amount needed to cover annual program costs and maintain a minimal contingency reserve in the trust funds (15% trust fund ratio)
  • Reduce OASI benefit levels by the value of PRSA contributions accumulated at an assumed annual rate of the yield on trust fund assets plus 0.7 percentage points

Total for proposal

Note: All estimates are based on the intermediate assumptions of the 2003 OASDI Trustees Report.
/ Totals for individual provisions exclude interaction.
/ Decrease in actuarial balance that is negligible, i.e., less then 0.005 percent of taxable payroll.


Social Security Administration
Office of the Chief Actuary
September 10, 2003

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