The Council was composed of a Chair and 12 members representing employers and employees, self-employed persons, and the public. The Council's charge was focused on the OASDI program. Among the areas the Secretary specifically asked the Council to examine was Social Security financing. The Advisory Council submitted its report to the Secretary of Health and Human Services and the Commissioner of Social Security on January 6, 1997.
The Council's report presents three alternative sets of recommendations for restoring the long-range actuarial balance of the OASDI program. The first approach would maintain the Social Security benefit and tax structure essentially as it is in the current program, with the possibility that a portion of trust-fund assets be invested in private equities and managed by the Federal Government. Another approach would privatize a significant portion of the current program by directing 5 percentage points of each worker's contributions (from the current 12.4-percent contribution rate for employees and employers, combined) to a "Personal Security Account". Transition costs under this plan would require additional financing equivalent to 1.52 percent of taxable earnings over the first 72 years. A third approach would scale back benefits to levels that could be financed by the current 12.4-percent contribution rate and establish a defined contribution benefit plan, an Individual Account for each worker, through an additional 1.6-percent mandatory contribution payable by the worker to an investment account managed by the Federal Government.
The Council also convened a Technical Panel on Assumptions and Methods to review the assumptions and methodology used to project the future financial status of the OASDI program. In addition, a Technical Panel on Trends and Issues in Retirement Savings was convened by the Council to help analyze the relative roles of the public and private sectors in providing retirement income.
The Technical Panel on Assumptions and Methods found the intermediate estimates in the 1995 annual report of the Board of Trustees to be reasonable. Although the Panel did suggest that modifications be considered in various specific assumptions, the Panel also recognized that the overall effect of those suggestions would not significantly change the estimates of the financial status of the Social Security program. The Technical Panel on Trends and Issues in Retirement Savings recognized the present deficit in the long-range actuarial status of the Social Security program and developed criteria for evaluating a range of policy options to reduce the deficit. Reports of the findings of both Technical Panels were submitted to the Advisory Council in 1995 and are included in Volume II of the Council's report.