2019 OASDI Trustees Report

 

B. TRUST FUND FINANCIAL OPERATIONS IN 2018

Table II.B1 shows the income, cost, and asset reserves for the OASI, the DI, and the combined OASI and DI Trust Funds in calendar year 2018.

Table II.B1.—Summary of 2018 Trust Fund Financial Operations

[In billions]

		OASI	DI	OASDI
Asset reserves at the end of 2017		$2,820.3	$71.5	$2,891.8
Total income in 2018		831.0	172.3	1,003.4
	Net payroll tax contributions	715.9	169.2	885.1
	Interest	80.7	2.6	83.3
	Taxation of benefits	34.5	.5	35.0
	Reimbursement from General Fund of the Treasury	a	a	a
Total cost in 2018		853.5	146.8	1,000.2
	Benefit payments	844.9	143.7	988.6
	Administrative expenses	3.8	2.9	6.7
	Railroad Retirement financial interchange	4.8	.2	4.9
Net increase in asset reserves in 2018		-22.4	25.6	3.1
Asset reserves at the end of 2018		2,797.9	97.1	2,894.9

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a

Less than $50 million.

Note: Totals do not necessarily equal the sums of rounded components.

In 2018, net payroll tax contributions accounted for 88.2 percent of total trust fund income. Net payroll tax contributions consist of taxes paid by employees, employers, and the self-employed on earnings covered by Social Security. These taxes are paid on covered earnings up to a specified maximum annual amount, which was $128,400 in 2018. Table II.B2 shows the payroll tax rates for 2018.

Interest earned on invested trust fund asset reserves accounted for 8.3 percent of OASI and DI combined trust fund income in 2018. Revenue from subjecting up to 50 percent of Social Security benefits to Federal personal income taxation for beneficiaries with income (including half of benefits and all non-taxable interest received) exceeding specified levels accounted for 3.5 percent of OASDI income. The remaining income to the combined OASI and DI Trust Funds, less than 0.01 percent, came from reimbursements from the General Fund of the Treasury.¹

The Department of the Treasury invests trust fund reserves in interest-bearing securities issued by the U.S. Government. In 2018, the combined trust fund reserves earned interest at an effective annual rate of 2.9 percent.

Retirement, survivor, and disability benefits accounted for 98.8 percent of OASI and DI combined trust fund cost in 2018. The expenses for administering the Social Security program were 0.7 percent of total cost. The net payment to the Railroad Retirement Social Security Equivalent Benefit Account from the combined OASI and DI Trust Funds accounted for 0.5 percent of total OASDI cost.

The trust fund investments provide the basis for paying benefits. Combined trust fund reserves increased by $3.1 billion during 2018 because income to the combined funds, including interest earned on trust fund reserves, exceeded total cost. In last year’s report, combined reserves were projected to start declining in 2018. At the end of 2018, the combined reserves of the OASI and the DI Trust Funds were $2,895 billion, or 273 percent of estimated cost² for 2019. In comparison, the combined reserves at the end of 2017 were 289 percent of actual cost for 2018.

Table II.B2.—Payroll Tax Contribution Rates for 2018

[In percent]

	OASI	DI	OASDI
Payroll tax contribution rate for employees	5.015	1.185	6.20
Payroll tax contribution rate for employers	5.015	1.185	6.20
Payroll tax contribution rate for self-employed persons	10.030	2.370	12.40

Note: Section 833 of Public Law 114-74, the Bipartisan Budget Act of 2015, requires a temporary reallocation of the payroll tax rates between the OASI and DI Trust Funds. For earnings in calendar years 2016 through 2018, this section increases from 1.80 percent to 2.37 percent the portion of the total 12.40 percent OASDI payroll tax that is directed to the DI Trust Fund. There is a corresponding decrease in the portion of the tax rates directed to the OASI Trust Fund for these years.

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1

Public Laws 111-312, 112-78, and 112-96 account for most of the reimbursement for the year. These acts specified General Fund reimbursement for temporary reductions in revenue due to reduced payroll tax rates for employees and for self-employed workers for 2011 and 2012.

2

Estimated cost is based on the intermediate set of assumptions.