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Provisions Affecting Trust Fund Investment in Marketable Securities

Present law trust fund investment holdings

These provisions invest a portion of the Social Security trust funds in marketable securities (e.g., equities, corporate bonds), rather than in special-issue government bonds as under current law. We provide a summary list of all options in this category. For each provision listed below, we provide an estimate of the financial effect on the OASDI program over the long-range period (the next 75 years) and for the 75th year. In addition, we provide graphs and detailed single year tables. We base all estimates on the intermediate assumptions described in the 2013 Trustees Report.

The selections G3 and G5 provide a low-yield or risk-adjusted perspective where equity yields equal the average real yield on long-term Treasury bonds. Thus, these selections have no effect on the actuarial balance of the OASDI program. Many analysts believe the higher expected return for equities should not be included in valuations because the tendency for higher average returns is compensation for the higher volatility in equities. The low or risk-adjusted yield assumption reflects this perspective.

Choose the type of estimates (summary or detailed) from the list of provisions.

Number Table and graph selection
G1 Invest 40 percent of the Trust Funds in equities (phased in 2014-2028), assuming an ultimate 6.4 percent real rate of return on equities.
Summary measures and graphs   (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing this or a similar provision:
G2 Invest 40 percent of the Trust Funds in equities (phased in 2014-2028), assuming an ultimate 5.4 percent real rate of return on equities.
Summary measures and graphs   (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing this or a similar provision:
G3 Invest 40 percent of the Trust Funds in equities (phased in 2014-2028), assuming an ultimate 2.9 percent real rate of return on equities. Thus, the ultimate rate of return on equities is the same as that assumed for Trust Fund bonds.
Summary measures and graphs   (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing this or a similar provision:
G4 Invest 15 percent of the Trust Fund in equities (phased in 2014-2023), assuming an ultimate 6.4 percent annual real rate of return on equities.
Summary measures and graphs   (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing this or a similar provision:
G5 Invest 15 percent of the Trust Funds in equities (phased in 2014-2023), assuming an ultimate 2.9 percent annual real rate of return on equities. Thus, the ultimate rate of return on equities is the same as that assumed for Trust Fund bonds.
Summary measures and graphs   (PDF version)
Detailed single year tables   (PDF version)
Memorandum containing this or a similar provision:

Above provisions
Summary measures
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Last reviewed or modified September 30, 2013