2008 OASDI Trustees Report

 

B. TRUST FUND FINANCIAL OPERATIONS IN 2007

The table below shows the income, expenditures, and assets for the OASI, the DI and the combined OASDI Trust Funds in calendar year 2007.

 

Table II.B1.—Summary of 2007 Trust Fund Financial Operations

		Amounts (in billions)
		OASI	DI	OASDI
Assets at the end of 2006		$1,844.3	$203.8	$2,048.1
Total income in 2007		675.0	109.9	784.9
	Net contributions	560.9	95.2	656.1
	Taxation of benefits	17.2	1.4	18.6
	Interest	97.0	13.2	110.2
Total expenditures in 2007		495.7	98.8	594.5
	Benefit payments	489.1	95.9	584.9
	Railroad Retirement financial interchange	3.6	.4	4.0
	Administrative expenses	3.1	2.5	5.5
Net increase in assets in 2007		179.3	11.1	190.4
Assets at the end of 2007		2,023.6	214.9	2,238.5

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

In 2007, net contributions accounted for 84 percent of total trust fund income. Net contributions consist of taxes paid by employees, employers and the self-employed on earnings covered by Social Security. These taxes were paid on covered earnings up to a specified maximum annual amount, which was $97,500 in 2007 and is increased each year automatically (to $102,000 in 2008) as the average wage increases. The tax rates scheduled under cur­rent law for 2007 and later are shown in table II.B2.

 

Table II.B2.—Tax Rates for 2007 and Later

	OASI	DI	OASDI
Tax rate for employees and employers, each (in percent)	5.30	0.90	6.20
Tax rate for self-employed persons (in percent)	10.60	1.80	12.40

Two percent of OASDI Trust Fund income came from subjecting up to 50 percent of Social Security benefits above specified levels to Federal per­sonal income taxation, and 14 percent of OASDI income came from interest earned on investment of OASDI Trust Fund reserves. Social Security’s assets are invested in interest-bearing securities of the U.S. Government. In 2007 the combined trust fund assets earned interest at an effective annual rate of 5.3 percent. More than 98 percent of expenditures from the combined OASDI Trust Funds in 2007 went to pay retirement, survivor, and disability benefits totaling $584.9 billion. The financial interchange with the Railroad Retirement program resulted in a payment of $4.0 billion from the combined OASDI Trust Funds, or about 0.7 percent of total expenditures. The adminis­trative expenses of the Social Security program were $5.5 billion, or about 0.9 percent of total expenditures.

Assets of the trust funds provide a reserve to pay benefits whenever total pro­gram cost exceeds income. Trust fund assets increased by $190.4 billion in 2007 because income to each fund exceeded expenditures. At the end of 2007, the combined assets of the OASI and the DI Trust Funds were 359 percent of estimated expenditures for 2008, up from an actual level of 345 percent at the end of 2006.