3.1 Is Congress looking at other countries' models?

Yes, many of these proposals under consideration are based on programs in other countries such as Chile and the United Kingdom.

3.2 What impact will Social Security reform have on other federal programs?

If savings are made primarily by reducing benefits, it may cause more people to need other federal programs such as Supplemental Security Income, food stamps and Medicaid.

3.3 Can we both maintain a safety net and initiate a tiered system that would allow for personal saving accounts?

To do this requires the transition costs to a new system to be carried by current workers and to the extent that Social Security benefits are cut, by beneficiaries as well.

3.4 What is the interest rate on trust fund investments that was used to make the projection on how long the Social Security trust funds would last?

In the "best estimate" scenario, long-term interest rate is assumed to be 6.0%.

3.5 How long would the Social Security trust funds last if they earned an average interest rate of 8%, 9%, or 10%?

A higher interest rate would extend the life of the trust funds. The 1998 report of the Social Security trustees illustrates how a higher interest rate would reduce the long- term deficit--which is 2.19 percent of taxable payroll under their "best estimate" scenario. That scenario assumes that the long-term interest rate is 2.8 percent higher than inflation (or 6.3 percent total.) If they assume a higher interest rate--3.5 percent higher than inflation (or 7% total)-- the deficit would be reduced by about one fifth. (It would drop from 2.19 percent to 1.72 percent of payroll.

3.6 What about those of us in the younger generation who want to plan for our retirement but are penalized for our attempts to save? How can we benefit from a system that in all reality will not give me the return for what I put in?

One of the major objectives of reform is to assure young workers a fair and equitable Social Security system when they need it as a result of disability, death (survivors benefits for spouse and children) and retirement.

3.7 Will the Social Security Administration increase the SGA over $500.00

SSA currently is studying the issue of raising the monthly earnings amount used to determine if work and earnings for non-blind people with disabilities is substantial gainful activity (SGA). (SGA is a concept prescribed by law to be used in determining initial and continuing entitlement to Social Security Disability Insurance (SSDI) benefits and initial eligibility for Supplemental Security Income (SSI) disability benefits.) This study includes considering if increasing the $500 amount would strengthen the concept of SGA as a reasonable and meaningful criterion for evaluating work as a component of disability.

SSDI beneficiaries who return to work and complete their 9-month trial work period are entitled to up to 39 consecutive months of Medicare, if their impairments continue to be disabling. This provides up to 48 months of Medicare coverage. If they continue working and perform work at the SGA level, beneficiaries may purchase Medicare coverage after the 39-month period.

Also, the Balanced Budget Act of 1997 allows States to extend Medicaid coverage to certain people with disabilities. SSA is working with the Health Care Finance Administration to assure maximum State participation in this program to assist SSDI and SSI disability beneficiaries continue their health care coverage at a reasonable cost.

In addition, legislation pending in Congress, the Ticket to Work and Self- Sufficiency Act of 1998, would continue Medicare benefits for up to 2 years longer. This legislation contains provisions similar to legislation proposed by SSA last year.

3.8 Why not have a means test of recipient needs?

"Means testing" has been suggested as a reform proposal. It could be carried out in a variety of ways, including taxing the benefits of higher income beneficiaries at a higher rate than under current law, establishing an upper income lit-nit of benefits, reducing the cost-of -living increase for high income beneficiaries, and others. Opponents of means testing believe that over time it will undermine the broad base of support for Social Security and turn it into a welfare-like program.

3.9 How will actual economic growth rates (if different from "intermediate" projections) affect the system as we are designing it? Could there still be not enough funds, or could there be excess; what would happen in either scenario?

The "intermediate" assumptions prepared by the actuaries are those accepted by policy makers in their deliberations and decision making. Under the "low cost" assumptions, Social Security would continue to have a positive balance at the end of the valuation period (2072). Under the "high cost" assumptions, the Social Security deficit would be about twice that under the -intermediate assumptions at the end of the valuation period.

3.10 If the system is so great, why does it continually need increasing taxes, later eligibility, and other negative adjustments?

Social Security mirrors or reflects changes in our society and our economy. The long-range financing shortfall on Social Security is due to demographic factors that have been influenced by choices made by our society. The "baby boom" occurs because one generation had more children and a late generation had children at a lower rate, which results in fewer workers to support retirees. In addition, people are living longer, reflecting better living standards and better health care. Social Security and Medicare have played important roles in these factors. More retirees with fewer workers, and longer life spans combined to increase long-range Social Security costs.

3.11 What thoughts are being put forward about providing education for people to understand the financial implications of taking more responsibility for their own benefits?

Educating the public about their individual responsibility to save for their retirement is an important component of any Social Security reform package. The Social Security Administration has increased its public education activities to inform contributors and beneficiaries that Social Security is intended to be only one "leg" of the retirement stool, with pensions and private savings as the other critical legs.

3.12 Has anyone studied the effects of a tax break to the wealthy for forgoing their benefits?

This is a suggestion that could be made to your Congressional Representatives and Senators. There are not currently any proposals of this kind in the reform packages.

3.13 Will Social Security detail all its financial figures in an ongoing way that is made very simple and understandable to the person in the street and, more importantly, to each contributing worker by projecting retirement with a "normal" payment stream for ten years out to "normal" retirement?

Beginning in October 1999, the Social Security Administration will send annual Personal Earnings and Benefit Estimate Statements (PEBES) to all persons age 25 and over with earnings. These are intended to enable workers to check the earnings posted.for them and project benefits for total retirement planning, as well as inform them of their disability and survivors insurance coverage. These statements are currently sent to all working individuals age 60 and over.

3.14 If we need to work longer before drawing our Social Security benefits, are we going to fund the agencies such as the EEO to pursue age discrimination done by corporate America? And put teeth into their decisions and laws?

There are many issues related to raising the retirement age that need to be thoroughly -examined. The implications of delaying the retirement age even further than provided for under current law (age 67 by 2027) are not fully understood.

3.15 Will any program that incorporates "Affluence Testing" preserve a floor of protection?

"Means testing" Social Security benefits could be carried out in a variety of ways including taxing the benefits of higher income beneficiaries, and other ways. Means testing would not affect lower income beneficiaries.

3.16 What reform tactics or program would be the best?

The President has called for a period of public education and discussion to last throughout this year. The purpose of this is to involve the public in the debate in an effort to reach a consensus on the changes that must be made to strengthen Social Security.

3.17 A question about the direct deposit of Social Security benefits - will it be compulsory, how will it be managed, and how long will it take for "direct-deposited" checks to be available to the recipient and who gets the interest in the meantime?

Direct deposits of Social Security checks has been available to beneficiaries for 20 years. The federal government is moving towards a system of paper less payments through direct deposit, but exceptions can be made under certain circumstances. Direct deposits save the government and taxpayers money. Beneficiaries do not have to worry about their monthly checks being delayed, lost, or stolen in the mail and would be available immediately to the beneficiary (so that there would be no "interest lost"). Further information on direct deposit policy can be obtained by calling the Social Security Administration's 800 number (1-800-772-1213).

3.18 Do your projections consider any changes in immigration policies and welfare reform requiring recipients to work?

The Social Security actuarial projections are based on many economic and demographic factors, including present immigration policy and size and nature of the labor force.

3.19 As far as Social Security benefits go, how can Social Security "police" other agencies from giving false information in order to get a "cut" of a person's benefits? Also, as far as reform, how will Social Security stop the fraud in persons getting or applying for benefits?

Social Security Inspector General pursues vigorously all types of fraud cases involving Social Security benefits. One of the best ways to guard against fraud is for individuals to protect their Social Security number and not give it out to agencies and businesses that use it as an identifier number. The Supplemental Security Income (SSI) program, which is administered by Social Security, is more reflective to individual's earnings record. SSI is not paid for by the Social Security trust funds, rather it is funded by general revenues. The Inspector General has undertaken recent new initiatives designed to reduce fraud.

3.20 What has been the track record of the Social Security actuaries in estimating the funding needs of the system? What are the factors that could significantly change the current projections?

It is not possible for the actuarial forecasts to predict accurately all future economic and demographic developments. In its 60-year history, Social Security has never been unable to pay benefits. The actuaries' predictions have contributed greatly to Social Security's success.

3.21 Has "means testing" been considered?

"Means testing" is being considered and could be accomplished through a variety of mechanisms, including: taxing the benefits of higher income beneficiaries at a higher rate then under current law, establishing an upper income limit for benefits, and reducing cost-of-living increases for high income beneficiaries.

3.22 As the Baby Boom generation gets older the workforce will get smaller, payrolls will decrease and productivity will have to rise to meet demand. Employers and corporations will be the direct benefactors of this trend. Why is raising the employer share of contribution not the way to go?

This is a possibility, but one that employers would not likely support and could be expected to work against the political and legislative process. Actually, the workforce and payrolls will not decrease in absolute amounts, but they will not rise as rapidly as the number of beneficiaries.

3.23 Will any future changes to the system be retroactive in any way?

Changes are unlikely to be retroactive. At this time, policy makers are looking for ways to balance the long-range costs of the program.