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Trustees Reports- 1995 |
III. APPENDICESA. ACTUARIAL ESTIMATES FOR THE OASDI AND HI PROGRAMS, COMBINEDIn this appendix, long-range actuarial estimates for the OASDI and Hospital Insurance (HI) programs are combined to facilitate analysis of the adequacy of the combined income and assets of the trust funds relative to their combined expenditures. Combining cost and income rates as percentages of taxable payroll requires a note of caution. The taxable payrolls for the HI program are larger than those estimated for the OASDI program because (1) a larger maximum taxable amount was established for the HI program in 1991, with the maximum being eliminated altogether for the HI program in 1994, (2) a larger proportion of Federal, State, and local government employees have their wages covered under the HI program, and (3) the earnings of railroad workers are included in the HI taxable payroll but not in the OASDI taxable payroll (railroad contributions for the equivalent of OASDI benefits are accounted for on a net interchange that occurs annually between the OASDI and Railroad Retirement programs). As a result, the HI taxable payroll is about 20 percent larger than the OASDI taxable payroll throughout the long-range period. Nonetheless, combined OASDI and HI rates shown in this appendix are computed by adding the separately derived rates for the programs. The resulting combined rates may be interpreted as those applicable to the taxable payroll in the amount of the OASDI payroll, with the separate HI rates being additionally applicable to the excess of the HI payroll over the OASDI payroll. Long-range estimates are subject to much uncertainty and should not be considered precise forecasts. Instead they should be considered as indicative of the general trend and range of costs that could reason ably be expected to occur. The emphasis in this appendix on combined operations, while significant, should not obscure the analysis of the financial status of the individual trust funds, which are legally separate and cannot be commingled. In addition, the factors which determine the costs of the OASI, DI, and HI programs differ substantially. As with the OASI and DI Trust Funds, income to the HI Trust Fund comes primarily from contributions paid by employees, employers, and self-employed persons. The combined OASDI and HI contribution rate for employees and their employers is often referred to as the FICA tax, because it is authorized by the Federal Insurance Contributions Act. Contribution rates for the OASDI and HI programs are shown in table III.A1. Table III.A2 shows estimated annual income rates and cost rates for the OASDI program, the HI program, and the combined OASDI and HI programs, based on the low cost, intermediate, and high cost sets of assumptions (alternatives I, II, and III) described earlier in this report. These annual rates are intended to indicate the cash-flow operation of the programs. Therefore, income rates exclude interest earned on trust fund assets and cost rates exclude the cost of accumulating or maintaining target trust fund balances. Table III.A2 also shows the difference between income rates and cost rates, called balances. Estimates shown for the combined trust funds are theoretical because no authority currently exists for transferring assets from one trust fund to another. Under all three sets of assumptions, combined OASDI and HI cost rates are projected to rise above current levels, with the sharpest increase occurring during the period 2010-2030. Under the high cost set of assumptions, alternative III, annual deficits are projected to occur within the next 3 years, and to continue for the remainder of the 75-year projection period. Cost rates are projected to rise to over three times their current level by the end of the projection period. Under the intermediate assumptions, alternative II, annual deficits begin in the year 2002, with cost rates almost doubling by the end of the projection period. Under the low cost assumptions, alternative I, cost rates are projected to increase by about 25 percent, with annual deficits beginning by the year 2020. Tables III.A3 and III.A4 show the estimates of summarized OASDI and HI income rates, cost rates and balances for various time periods, based on all three sets of assumptions. In table III.A3 values are summarized over the three 25-year subperiods (excluding the beginning fund balances and the cost of accumulating ending fund targets). In table III.A4 values are summarized over the 25-year, 50-year, and 75-year valuation periods (for which beginning fund balances are included in the summarized income rates, and the costs of accumulating an ending fund balance equal to 100 percent of annual expenditures by the end of the period are included in the summarized cost rates). Estimates shown for the combined trust funds are theoretical because no authority currently exists for transferring assets from one trust fund to another. Under the high cost alternative III, the combined OASDI and HI system is projected to experience large deficits during the 25-year, 50-year, and 75-year valuation periods (including beginning trust fund balances and the cost of ending fund targets). Deficits are projected to occur during each 25-year subperiod of the 75-year projection period (excluding beginning trust fund balances and the cost of ending fund targets). Under intermediate alternative II assumptions, deficits of smaller magnitude than those for the high cost alternative III are projected to occur for each of the three 25-year subperiods and for each of the three valuation periods. Under the low cost alternative I, the combined OASDI and HI system is projected to show positive balances for the first 25-year subperiod and the 25-year valuation period, and a small positive balance for the 50-year valuation period. Relatively small deficits are projected for the 75-year valuation period and for the second and third 25-year subperiods. B. LONG-RANGE ESTIMATES OF SOCIAL SECURITY TRUST FUND OPERATIONS IN DOLLARSThis appendix presents long-range projections in dollars of the operations of the combined OASI and DI Trust Funds and in some cases the HI Trust Fund. It provides the means to track the progress of the funds during the projection period. Meaningful comparison of current dollar values over long periods of time can be difficult because of the tendency toward inflation. Some means of removing inflation is thus generally desirable. Several economic series, or `indices,' are provided to allow current dollars to be adjusted for changes in prices, wages, and certain other aspects of economic growth during the projection period. The selection of a particular index for adjustment of current dollars depends upon the analyst's decision as to which index provides the most useful standard for adjusting dollar amounts, over time, to create values that are appropriately comparable. Table III.B1 presents five such indices for adjustment. One of the most common forms of standardization is based on some measure of change in the prices of consumer goods. One such price index is the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W, hereafter referred to as `CPI', which is published by the Bureau of Labor Statistics, Department of Labor. This is the index used to determine annual increases in OASDI monthly benefits payable after the year of initial eligibility. The CPI is assumed to increase ultimately at annual rates of 3.0, 4.0, and 5.0 percent for the low cost, intermediate, and high cost sets of assumptions (alternatives I, II, and III, respectively). Constant-dollar values (those adjusted by the CPI) are provided in table III.B2. Another type of standardization combines the effects of price inflation with real-wage growth. The wage index presented here is the `SSA average wage index,' as defined in section 215(i)(1)(G) of the Social Security Act. This index is used to make annual adjustments to many earnings-related quantities embodied in the Social Security Act, such as the contribution and benefit base. The average annual wage is assumed to increase ultimately by 4.5, 5.0, and 5.5 percent under the low cost, intermediate, and high cost alternatives (I, II, and III), respectively. The taxable payroll index adjusts for the effects of changes in the number of workers and changes in the proportion of earnings that are taxable, as well as for the effects of price inflation and real-wage growth. The OASDI taxable payroll consists of all earnings subject to OASDI taxation, adjusted for the lower effective tax rate on multiple-employer `excess wages,' and including deemed wage credits for military service. The gross domestic product (GDP) index adjusts for the growth in the aggregate amount of goods and services produced in the United States. Values adjusted by GDP (see appendix III.C) indicate their relative share of the total output of the economy. No explicit assumptions are made about growth in taxable payroll or GDP. These series are computed reflecting the other more basic economic and demographic assumptions, as discussed in section II.H. Discounting with interest is another way of adjusting current dollars. The series of interest-rate factors included here is based on the average of the assumed annual interest rates for special public-debt obligations issuable to the trust funds. This series is slightly different from the interest rates used to create summarized values elsewhere in this report, where the actual yield on currently held trust fund assets is used for each year. Ultimate nominal interest rates compounded semiannually, are assumed to be approximately 6.0, 6.3, and 6.5 percent for the low cost, intermediate, and high cost alternatives (I, II, and III), respectively. Table III.B2 shows estimated operations of the combined OASI and DI Trust Funds in constant 1995 dollars (i.e., adjusted by the CPI indexing series as discussed above). Items included in the table are: income excluding interest, interest income, total income, total outgo, and assets at the end of the year. Income excluding interest consists of payroll-tax contributions, income from taxation of benefits, and miscellaneous reimbursements from the general fund of the Treasury. Outgo consists of benefit payments, administrative expenses, net transfers from the OASI and DI Trust Funds to the Railroad Retirement program under the financial-interchange provisions, and payments for vocational rehabilitation services for disabled beneficiaries. These estimates are based on the low cost, intermediate, and high cost sets of assumptions (alternatives I, II, and III). Figure III.B1 provides a comparison of outgo with total annual income (including interest) and annual income excluding interest, for the OASDI program under intermediate assumptions. All values are expressed in constant dollars, as shown in table III.B2. The difference between the income values for each year is equal to the trust fund interest earnings. Thus the figure illustrates the fact that, under intermediate assumptions, combined OASDI expenditures will be payable from (1) current tax income alone through 2012, (2) current tax income plus a portion of annual interest income for years 2013 through 2019, and (3) current tax income, annual interest income, plus a portion of the principal balance in the trust funds for years 2019 through 2029, i.e., through the year preceding the year of trust fund exhaustion.
Table III.B3 shows estimated operations of the combined OASI and DI Trust Funds in current dollars--that is in dollars unadjusted for inflation. Items included in the table are: income excluding interest, interest income, total income, total outgo, and assets at the end of the year. These estimates, based on the low cost, intermediate, and high cost sets of economic and demographic assumptions (I, II, and III), are presented to facilitate independent analysis. Table III.B4 shows estimated income (excluding interest) and estimated total outgo (excluding the cost of accumulating target trust fund balances) of the combined OASI and DI Trust Funds, of the HI Trust Fund, and of the combined OASI, DI, and HI Trust Funds, based on the low cost, intermediate, and high cost sets of assumptions (alternatives I, II, and III) described earlier in this report. For OASDI, income excluding interest consists of payroll-tax contributions, proceeds from taxation of OASDI benefits, and miscellaneous transfers from the general fund of the Treasury. Outgo consists of benefit payments, administrative expenses, net transfers from the trust funds to the Railroad Retirement program, and payments for vocational rehabilitation services for disabled beneficiaries. For HI, income excluding interest consists of contributions (including contributions from railroad employment), proceeds from the taxation of OASDI benefits, and payments from the general fund of the Treasury for contributions on deemed wage credits for military service. Total outgo consists of outlays (benefits and administrative expenses) for insured beneficiaries. Income and outgo estimates are shown on a cash basis for the OASDI program and on an incurred basis for the HI program. Table III.B4 also shows the difference between income excluding interest and outgo, which is called the balance. The balance indicates the size of the net cash flow from tax income and expenditures to the funds. Table III.B5 shows estimated future benefit amounts payable to persons attaining age 65 in various years based on retirement at the normal retirement age and at age 65, for various steady levels of pre-retirement earnings, based on intermediate assumptions. The benefit amount is shown in current dollars, constant dollars (adjusted by the CPI indexing series shown in table III.B1), and as a percentage of earnings in the 12-month period preceding retirement. The normal retirement age is currently 65, and is scheduled to increase to age 66 during the period 2000-2005 (at a rate of 2 months per year as workers attain age 62), and to age 67 during the period 2017-2022 (also by 2 months per year as workers attain age 62). The pre-retirement earnings levels shown are: low (earnings at 45 percent of the projected SSA average wage index), average (earnings at the amount of the projected SSA average wage index), and maximum (earnings at the amount of the projected OASDI contribution and benefit base). C. LONG-RANGE ESTIMATES OF SOCIAL SECURITY TRUST FUND OPERATIONS AS A PERCENTAGE OF THE GROSS DOMESTIC PRODUCTThis appendix presents long-range projections of the operations of the combined Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds and of the Hospital Insurance (HI) Trust Fund expressed as a percentage of the gross domestic product (GDP). While expressing these fund operations as a percentage of taxable payroll is the most useful approach for assessing the financial status of the programs, (see table II.F13 and section III.A), analyzing them as a percentage of GDP provides an additional perspective on these fund operations in relation to the total value of goods and services produced in the United States. Table III.C1 shows estimated income excluding interest, total outgo, and the resulting balance of the combined OASI and DI Trust Funds, of the HI Trust Fund, and of the combined OASI, DI, and HI Trust Funds, expressed as percentages of GDP on the basis of each of the three alternative sets of assumptions. The estimated GDP on which these percentages are based is also shown in table III.C1. For OASDI, income excluding interest consists of payroll-tax contributions, proceeds from taxation of benefits, and various reimbursements from the general fund of the Treasury. Total outgo consists of benefit payments, administrative expenses, net transfers from the trust funds to the Railroad Retirement program, and payments for vocational rehabilitation services for disabled beneficiaries. For HI, income excluding interest consists of contributions (including contributions from railroad employment) and payments from the general fund of the Treasury for contributions on deemed wage credits for military service. Total outgo consists of outlays (benefits and administrative expenses) for insured beneficiaries. Both the HI income and outgo are on an incurred basis. The OASDI balance (income excluding interest, less outgo) as a percentage of GDP is projected to be positive on the basis of the low cost alternative I through 2020, but with decreasing deficits after 2030. The OASDI balance is projected to be positive through 2010 on the basis of the intermediate alternative II and through 1998 on the basis of the high cost alternative III, before becoming permanently negative, with increasing deficits. The projected HI balance as a percentage of GDP, however, is negative, with increasing deficits, throughout the long-range period under all three alternatives. The combined OASDI and HI balance as a percentage of GDP is projected to be positive through 2015 under the low cost alternative I, through 1999 under the intermediate alternative II, and through only 1996 under the high cost alternative III. Between 2010 and about 2030, under all three alternatives, both the OASDI and HI balances as percentages of GDP are projected to decline substantially because the `baby-boom' generation reaches retirement age during these years. After balances cease to be positive under the intermediate and high cost alternatives, the size of annual deficits increases fairly steadily for the OASDI and HI programs, both separately and combined. By the year 2070, the combined OASDI and HI balances as percentages of GDP, based on the three alternatives, are projected to differ by a relatively large amount: from a deficit of 1.04 percent for the low cost alternative I to a deficit of 11.43 percent for the high cost alternative III. Projected balances differ by a much smaller amount by the year 2005: from a positive balance of 0.65 percent for the low cost alternative I to a deficit of 1.29 percent for the high cost alternative III. The summarized long-range (75-year) balance as a percentage of GDP for the combined OASDI and HI programs varies by a relatively large amount (from a deficit of 0.24 percent, based on the low cost alternative I, to a deficit of 5.73 percent, based on the high cost alternative III). The 25-year summarized balance varies by a smaller amount (from a positive of 0.59 percent to a deficit of 1.56 percent). Summarized rates are calculated on the present-value basis including the trust fund balances on January 1, 1995 and the cost of reaching and maintaining a target trust fund level equal to 100 percent of annual expenditures by the end of the period. (See section II.F for further explanation.) The difference between trust fund operations expressed as percentages of taxable payroll and those expressed as percentages of GDP can be seen by analyzing the estimated ratios of OASDI taxable payroll to GDP, which are presented in table III.C2. HI taxable payroll is about 20 percent larger than the OASDI taxable payroll throughout the long-range period (see section III.A for a detailed description of the difference). The cost as a percentage of GDP is approximately equal to the cost as a percentage of taxable payroll multiplied by the ratio of taxable payroll to GDP. Projections of GDP for the first several years were based on assumed quarterly changes in real GDP and the GDP implicit price deflator. Thereafter, projections of GDP were based on the projected increases in U.S. employment, labor productivity, and the GDP implicit price deflator. Productivity projections are consistent with assumed changes in the level of average earnings, the ratio of earnings to worker compensation, the ratio of worker compensation to GDP, and average hours worked per year (see section II.H). Projections of taxable payroll, which are described in detail in section II.H, were based on the projected increases in covered employment and average taxable earnings. Therefore, the projected increases in taxable payroll differ from projected increases in GDP primarily to the extent that average taxable earnings are assumed to increase more slowly than is productivity and to the extent that OASDI program coverage of employment changes over time. The long-range trend in the ratio of taxable payroll to GDP reflects the assumed trend in the ratio of wages to total employee compensation--i.e., wages plus fringe benefits. The ratio of wages to total employee compensation declined at average annual rates of 0.36 percent for the 40 years 1954-93 and 0.37, 0.44, 0.49, and 0.12 percent for the 10-year periods 1954-63, 1964-73, 1974-83, and 1984-93, respectively. Ultimate future annual rates of decline in the ratio of wages to employee compensation are assumed to be 0.1, 0.2, and 0.3 percent for alternatives I, II, and III, respectively. An additional factor that has made the overall ratio of taxable payroll to GDP decline in recent years is the decline in the ratio of taxable earnings to covered earnings, as a result the relatively greater increases in earnings for persons with earnings above the benefit and contribution base. This decline in the taxable ratio is assumed to continue at a slower pace through the end of this century. Between 1983 and 2015, however, the tendency toward decreases in the ratio of taxable payroll to GDP, discussed above, is at least partially offset by the gradually expanding OASDI coverage of Federal civilian employment resulting from the 1983 amendments. For the low cost alternative I, the ratio of taxable payroll to GDP is projected to be nearly constant through the year 2005, and then to decrease for the remainder of the long-range period. For the intermediate and high cost alternatives, the ratio of taxable payroll to GDP is projected to decrease essentially throughout the long-range period. D. TEN YEAR HISTORY OF ACTUARIAL BALANCE ESTIMATESThis appendix chronicles the recent history of the primary measure of long-range actuarial status, namely the actuarial balance, as shown in the annual reports for 1985 and later. Actuarial balance is defined in detail in section II.F, Actuarial Estimates. Conceptually, the two basic components of actuarial balance are the summarized income rate and the summarized cost rate. Both rates are expressed as percentages of taxable payroll. For any given period, the actuarial balance is the difference between the present value of tax income for the period, and the present value of the outgo for the period, each divided by the present value of taxable payroll for all years in the period. Also included in the calculation of the actuarial balance are:
It should be noted that the current method of calculating the actuarial balance based on present values, though used prior to the 1973 Annual Report, was not used for the annual reports of 1973-87. Instead, a simpler method that approximates the results of the present-value approach, called the `average-cost' method, was used during that period. Under the average-cost method, the sum of the annual cost rates (which are expressed as percentages of taxable payroll) over the 75-year projection period was divided by the total number of years, 75, to obtain the average cost rate per year. The average income rate was similarly calculated, and the difference between the average income rate and the average cost rate was called the actuarial balance. In 1973, when the average-cost method was first used, the long-range financing of the program was more nearly on a pay-as-you-go basis. Also, based on the long-range economic and demographic assumptions then being used, the annual rate of growth in taxable payroll was about the same as the annual rate at which the trust funds earned interest. In either situation (i.e., pay-as-you-go financing, where the annual income rate is the same as the annual cost rate, or an annual rate of growth in taxable payroll equal to the annual interest rate), the average-cost method produces the same result as the present-value method. However, by 1988, neither of these situations still existed. As a result of legislation enacted in 1977 and in 1983, substantial increases in the trust funds were estimated to occur well into the next century, so that the program was partially `advance funded,' rather than being funded on a pay-as-you-go basis. Also, because of declines in long-range fertility rates and average real-wage growth that were assumed in the annual reports over the period 1973-87, the annual rate of growth in taxable earnings assumed for the long range became significantly lower than the assumed interest rate. Therefore, during the period 1973-87, the results of the average-cost method and the present-value method began to diverge, and by 1988 they were quite different. While the average-cost method still accounted for most of the effects of the assumed interest rate, it no longer accounted for all of the interest effects. The present-value method, of course, does account for the full effect of the assumed interest rates. So, in 1988, the present-value method of calculating the actuarial balance was resumed. A positive actuarial balance indicates that estimated income is more than sufficient to meet estimated trust fund obligations for the period as a whole. A negative actuarial balance indicates that estimated income is insufficient to meet estimated trust fund obligations for the entire period. An actuarial balance of zero indicates that the estimated income exactly matches estimated trust fund obligations for the period. Table III.D1 shows the estimated OASDI actuarial balances, as well as the summarized income and cost rates, for the last 10 annual reports (1985-1994), along with the estimates for the current report. The values shown are based on the intermediate alternative II assumptions, or alternative II-B for years prior to 1991. For several of the years included in the table, significant legislative changes or definitional changes have affected the estimated actuarial balance. In 1985, for example, the estimated actuarial balance changed largely because of an adjustment made to the method for estimating the age distribution of immigrants. Rebenchmarking of the National Income and Product Accounts, and changes in demographic assumptions contributed to the change in actuarial balance for 1987. Various changes in assumptions and methods for the 1988 report had roughly offsetting effects on the actuarial balance. In 1989 and 1990, changes in economic assumptions accounted for most of the changes in the estimated actuarial balance. In 1991, the effect of legislation, changes in economic assumptions, and the introduction of the cost of reaching and maintaining an ending trust fund target combined to produce the change in actuarial balance. In 1992, changes in disability assumptions and the method for projecting average benefit levels accounted for most of the change in the actuarial balance. In 1993, numerous small changes in assumptions and methods had offsetting effects on the actuarial balance. In 1994, changes in the real-wage assumption, disability rates, and the earnings sample used for projecting average benefit levels accounted for most of the change in the actuarial balance. Changes affecting the actuarial balance shown for the 1995 report are described in section II.F2 of this report. E. ACTUARIAL ANALYSIS OF BENEFIT DISBURSEMENTS FROM THE FEDERAL OLD-AGE AND SURVIVORS INSURANCE TRUST FUND WITH RESPECT TO DISABLED BENEFICIARIES (Required by section 201(c) of the Social Security Act)Effective January 1957, monthly benefits have been payable from the OASI Trust Fund to disabled children aged 18 and over of retired and deceased workers in those cases for which the disability began before age 18. The age before which disability is required to have begun was subsequently changed to age 22. Effective February 1968, reduced monthly benefits have been payable from this trust fund to disabled widows and widowers at ages 50 and above. Effective January 1991, the requirements for the disability of the widow or widower were made less restrictive. On December 31, 1994, about 758,000 persons were receiving monthly benefits from the OASI Trust Fund because of their disabilities or the disabilities of children. This total includes 47,000 mothers and fathers (wives or husbands under age 65 of retired-worker beneficiaries and widows or widowers of deceased insured workers) who met all other qualifying requirements and were receiving unreduced benefits solely because they had disabled-child beneficiaries (or disabled children aged 16 or 17) in their care. Benefits paid from this trust fund to the persons described above totaled $3,973 million in calendar year 1994. Table III.E1 shows these and similar figures for selected calendar years during 1960-94, and estimated experience for 1995-2004 based on the intermediate set of assumptions. Total benefit payments from the OASI Trust Fund with respect to disabled beneficiaries are estimated to increase from $4,254 million in calendar year 1995 to $7,235 million in calendar year 2004, based on the intermediate assumptions. In calendar year 1994, benefit payments (including expenditures for vocational rehabilitation services) with respect to disabled persons from the OASI Trust Fund and from the DI Trust Fund (including payments from the latter fund to all children and spouses of disabled-worker beneficiaries ) totaled $41,730 million. Of this amount, $3,973 million or 9.5 percent represented payments from the OASI Trust Fund. These and similar figures for selected calendar years during 1960-94 and estimates for calendar years 1995-2004 are presented in table III.E2. F. FEDERAL REGISTER NOTICEDEPARTMENT OF HEALTH AND HUMAN SERVICES Office of the Secretary 1995 Cost-of-Living Increase and Other Determinations AGENCY: Social Security Administration, HHS. ACTION: Notice. SUMMARY: The Secretary has determined-- (1) A 2.8 percent cost-of-living increase in Social Security benefits under title II, effective for December 1994; (2) An increase in the Federal Supplemental Security Income (SSI) monthly benefit amounts under title XVI for 1995 to $458 for an eligible individual, $687 for an eligible individual with an eligible spouse, and $229 for an essential person; (3) The national average wage index (formerly, the average of the total wages) for 1993 to be $23,132.67; (4) The Old-Age, Survivors, and Disability Insurance (OASDI) contribution and benefit base to be $61,200 for remuneration paid in 1995and self-employment income earned in taxable years beginning in 1995; (5) The monthly exempt amounts under the Social Security retirement earnings test for taxable years ending in calendar year 1995 to be $940 for beneficiaries age 65 through 69 and $680 for beneficiaries under age 65; (6) The dollar amounts (`bend points') used in the benefit formula for workers who become eligible for benefits in 1995 and in the formula for computing maximum family benefits; (7) The amount of earnings a person must have to be credited with a quarter of coverage in 1995 to be $630; (8) The `old-law' contribution and benefit base to be $45,300 for 1995; and (9) The OASDI fund ratio to be 116.6 percent for 1994. FOR FURTHER INFORMATION CONTACT: Jeffrey L. Kunkel, Office of the Actuary, Social Security Administration, 6401 Security Boulevard, Baltimore, MD 21235, (410) 965-3013. A summary of the information in this announcement is available in a recorded message by telephoning (410) 965-3053. This telephone message will be updated to reflect changes to the cost-of-living benefit increase and other determinations. SUPPLEMENTARY INFORMATION: The Secretary is required by the Social Security Act (the Act) to publish within 45 days after the close of the third calendar quarter of 1994 the benefit increase percentage and the revised table of `special minimum' benefits (section 215(i)(2)(D)). Also, the Secretary is required to publish on or before November 1 the national average wage index for 1993 (section 215(i)(2)(C)(ii)) and the OASDI fund ratio for 1994(section 215(a)(1)(D)), the OASDI contribution and benefit base for 1995 (section 230(a)), the amount of earnings required to be credited with a quarter of coverage in 1995 (section 213(d)(2)), the monthly exempt amounts under the Social Security retirement earnings test for 1995 (section 203(f)(8)(A)), the formula for computing a primary insurance amount for workers who first become eligible for benefits or die in 1995 (section 215(a)(1)(D)), and the formula for computing the maximum amount of benefits payable to the family of a worker who first becomes eligible for old-age benefits or dies in 1995 (section 203(a)(2)(C)). Cost-of-Living Increases General. The cost-of-living increase is 2.8 percent for benefits under titles II and XVI of the Act. Under title II, OASDI benefits will increase by 2.8 percent beginning with the December 1994 benefits, which are payable on January 3, 1995. This increase is based on the authority contained in section 215(i) of the Act (42 U.S.C. 415(i)). Under title XVI, Federal SSI payment levels will also increase by 2.8 percent effective for payments made for the month of January 1995 but paid on December 30, 1994. This is based on the authority contained in section 1617 of the Act (42 U.S.C. 1382f). The percentage increase effective January 1995 is the same as the title II percentage increase and the annual payment amount is rounded, when not a multiple of $12, to the next lower multiple of $12. Automatic Benefit Increase Computation. Under section 215(i) of the Act, the third calendar quarter of 1994 is a cost-of-living computation quarter for all the purposes of the Act. The Secretary is, therefore, required to increase benefits, effective with December 1994, for individuals entitled under section 227 or 228 of the Act, to increase primary insurance amounts of all other individuals entitled under title II of the Act, and to increase maximum benefits payable to a family. For December 1994, the benefit increase is the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers from the third quarter of 1993 through the third quarter of 1994. Section 215(i)(1) of the Act provides that the Consumer Price Index for a cost-of-living computation quarter shall be the arithmetic mean of this index for the 3 months in that quarter. The Department of Labor's Consumer Price Index for Urban Wage Earners and Clerical Workers for each month in the quarter ending September 30, 1993, was: for July 1993, 142.1; for August 1993, 142.4; and for September 1993, 142.6. The arithmetic mean for this calendar quarter is 142.4 (after rounding to the nearest 0.1). The corresponding Consumer Price Index for each month in the quarter ending September 30, 1994, was: for July 1994, 145.8; for August 1994, 146.5; and for September 1994, 146.9. The arithmetic mean for this calendar quarter is 146.4. Thus, because the Consumer Price Index for the calendar quarter ending September 30, 1994, exceeds that for the calendar quarter ending September 30, 1993 by 2.8 percent, a cost-of-living benefit increase of 2.8 percent is effective for benefits under title II of the Act beginning December 1994. Title II Benefit Amounts. In accordance with section 215(i) of the Act, in the case of insured workers and family members for whom eligibility for benefits (i.e., the worker's attainment of age 62, or disability or death before age 62) occurred before 1995, benefits will increase by 2.8 percent beginning with benefits for December 1994 which are payable on January 3, 1995. In the case of first eligibility after 1994, the 2.8 percent increase will not apply. For eligibility after 1978, benefits are generally determined by a benefit formula provided by the Social Security Amendments of 1977 (Pub. L. 95-216), as described later in this notice. For eligibility before 1979, benefits are determined by means of a benefit table. In accordance with section 215(i)(4) of the Act, the primary insurance amounts and the maximum family benefits shown in this table are revised by (1) increasing by 2.8 percent the corresponding amounts established by the last cost-of-living increase and the last extension of the benefit table made under section 215(i)(4) (to reflect the increase in the OASDI contribution and benefit base for 1994); and (2) by extending the table to reflect the higher monthly wage and related benefit amounts now possible under the increased contribution and benefit base for 1995, as described later in this notice. A copy of this table may be obtained by writing to: Social Security Administration, Office of Public Inquiries, 4100 Annex, Baltimore, MD 21235. Section 215(i)(2)(D) of the Act also requires that, when the Secretary determines an automatic increase in Social Security benefits, the Secretary shall publish in the FEDERAL REGISTER a revision of the range of the primary insurance amounts and corresponding maximum family benefits based on the dollar amount and other provisions described in section 215(a)(1)(C)(i). These benefits are referred to as `special minimum' benefits and are payable to certain individuals with long periods of relatively low earnings. To qualify for such benefits, an individual must have at least 11 `years of coverage.' To earn a year of coverage for purposes of the special minimum, a person must earn at least a certain proportion (25 percent for years before 1991, and 15 percent for years after 1990) of the `old-law' contribution and benefit base. In accordance with section 215(a)(1)(C)(i), the table below shows the revised range of primary insurance amounts and corresponding maximum family benefit amounts after the 2.8 percent benefit increase.
SPECIAL MINIMUM PRIMARY INSURANCE AMOUNTS AND MAXIMUM FAMILY BENEFITS ------------------------------------------------------ Primary Primary Maximum insurance No. of years insurance family amount required amount benefit payable for minimum payable payable for Dec. 1993 earnings level for Dec. 1994 Dec. 1994 ------------------------------------------------------ $25.10 11 $25.80 $38.80 50.10 12 51.50 77.80 75.60 13 77.70 116.90 100.80 14 103.60 155.70 126.00 15 129.50 194.30 151.30 16 155.50 233.80 176.60 17 181.50 272.80 202.00 18 207.60 311.60 227.20 19 233.50 350.60 252.30 20 259.30 389.50 277.90 21 285.60 428.70 303.00 22 311.40 467.60 328.50 23 337.60 507.20 353.70 24 363.60 545.90 378.90 25 389.50 584.60 404.40 26 415.70 624.20 429.70 27 441.70 663.00 454.80 28 467.50 701.80 480.00 29 493.40 740.90 505.30 30 519.40 779.70 ------------------------------------------------------ Section 227 of the Act provides flat-rate benefits to a worker who became age 72 before 1969 and was not insured under the usual requirements, and to his or her spouse or surviving spouse. Section 228 of the Act provides similar benefits at age 72 for certain uninsured persons. The current monthly benefit amount of $183.40 for an individual under sections 227 and 228 of the Act is increased by 2.8 percent to obtain the new amount of $188.50. The present monthly benefit amount of $91.80 for a spouse under section 227 is increased by 2.8 percent to $94.30. Title XVI Benefit Amounts. In accordance with section 1617 of the Act, Federal SSI benefit amounts for the aged, blind, and disabled are increased by 2.8 percent effective January 1995. Therefore, the yearly Federal SSI benefit amounts of $5,352 for an eligible individual, $8,028 for an eligible individual with an eligible spouse, and $2,676 for an essential person, which became effective January 1994, are increased, effective January 1995, to $5,496, $8,244, and $2,748, respectively, after rounding. The corresponding monthly amounts for 1995 are determined by dividing the yearly amounts by 12, giving $458, $687, and $229, respectively. The monthly amount is reduced by subtracting monthly countable income. In the case of an eligible individual with an eligible spouse, the amount payable is further divided equally between the two spouses. National Average Wage Index for 1993 General. Under various provisions of the Act, several amounts are scheduled to increase automatically for 1995. These include (1) the OASDI contribution and benefit base, (2) the retirement test exempt amounts, (3) the dollar amounts, or `bend points,' in the primary insurance amount and maximum family benefit formulas, (4) the amount of earnings required for a worker to be credited with a quarter of coverage, and (5) the `old law' contribution and benefit base (as determined under section 230 of the Act as in effect before the 1977 amendments). These amounts are based on the annual increase in the average of the total wages. Section 321(e) of the `Social Security Independence and Program Improvements Act of 1994' (Pub.L. 103-296), enacted August 15, 1994, provided the name `national average wage index' for the average of the total wages. This new designation will be used throughout this notice. Section 321(g) of the new legislation also revised the formula used to determine the OASDI contribution and benefit base, the retirement test exempt amounts, and the old-law contribution and benefit base. Under the old formula, the determination in a given year of the next year's amount was the product of the current year's amount and the ratio of (1) the prior year's national average wage index to (2) the second prior year's average wage index. (For example, the determination of the 1995 contribution and benefit base under the old formula would have been the product of the 1994 base times the ratio of the 1993 national average wage index to the 1992 average wage index.) The revised formula differs from the old formula in that the current year's amount is replaced by the amount in effect for 1994 and the national average wage index for the second prior year is replaced by the 1992 national average wage index. Thus, the revised formula can be stated as follows: the determination in a given year of the next year's amount is the product of the 1994 amount and the ratio of (1) the prior year's national average wage index to (2) the 1992 natioinal average wage index. Under both the old and the revised formula, the resulting dollar amounts are rounded--to the nearest multiple of $300 in the case of each of the two types of contribution and benefit bases, and to the nearest $10 in the case of the monthly retirement test exempt amounts. By using fixed amounts in the revised formula, cumulative rounding distortions are eliminated. For the first determinations under the revised formula, the resulting amounts are the same as those that would have been determined under the old formula. For subsequent determinations, this may not be the case. Computation. The determination of the average wage index for calendar year 1993 is based on the 1992 national average wage index of $22,935.42 announced in the FEDERAL REGISTER on October 28, 1993 (58 FR 58004), along with the percentage increase in average wages from 1992 to 1993 measured by annual wage data tabulated by the Social Security Administration (SSA). The wage data tabulated by SSA include contributions to deferred compensation plans, as required by section 209(k) of the Act. The average amounts of wages calculated directly from this data were $22,001.92 and $22,191.14 for 1992 and 1993, respectively. To determine the national average wage index for 1993 at a level that is consistent with the national average wage indexing series for 1951 through 1977 (published December 29, 1978, at 43 FR 61016), we multiplied the 1992 national average wage index of $22,935.42 by the percentage increase in average wages from 1992 to 1993 (based on SSA-tabulated wage data) as follows (with the result rounded to the nearest cent): Amount. The national average wage index for 1993 is $22,935.42 times $22,191.14 divided by $22,001.92, which equals $23,132.67. Therefore, the national average wage index for calendar year 1993 is determined to be $23,132.67. OASDI Contribution and Benefit Base General. The OASDI contribution and benefit base is $61,200 for remuneration paid in 1995 and self-employment income earned in taxable years beginning in 1995. The OASDI contribution and benefit base serves two purposes: (a) It is the maximum annual amount of earnings on which OASDI taxes are paid. The OASDI tax rate for remuneration paid in 1995 is set by statute at 6.2 percent for employees and employers, each. The OASDI tax rate for self-employment income earned in taxable years beginning in 1995 is 12.4 percent. (The Hospital Insurance tax is due on remuneration, without limitation, paid in 1995, at the rate of 1.45 percent for employees and employers, each, and on self-employment income earned in taxable years beginning in 1995, at the rate of 2.9 percent.) (b) It is the maximum annual amount used in determining a person's OASDI benefits. Computation. Section 321(g) of the `Social Security Independence and Program Improvements Act of 1994' amended section 230(b) of the Act. As noted above, the amendment provided a technical change to the formula used to determine the OASDI contribution and benefit base. Under the revised formula, the base for 1995 shall be equal to the larger of the current base ($60,600) or the 1994 base of $60,600 multiplied by the ratio of the national average wage index for 1993 to that for 1992. If the amount so determined is not a multiple of $300, it shall be rounded to the nearest multiple of $300. Amount. The ratio of the national average wage index for 1993, $23,132.67 as determined above, compared to that for 1992, $22,935.42, is 1.0086002. Multiplying the 1994 OASDI contribution and benefit base amount of $60,600 by the ratio of 1.0086002 produces the amount of $61,121.17 which must then be rounded to $61,200. Accordingly, the OASDI contribution and benefit base is determined to be $61,200 for 1995. Retirement Earnings Test Exempt Amounts General. Social Security benefits are with held when a beneficiary under age 70 has earnings in excess of the retirement earnings test exempt amount. A formula for determining the monthly exempt amounts is provided in section 203(f)(8)(B) of the Act. The 1994 monthly exempt amounts were determined by the formula to be $930 for beneficiaries aged 65-69 and $670 for beneficiaries under age 65. Thus, the annual exempt amounts for 1994 were set at $11,160 and $8,040, respectively. For beneficiaries aged 65-69, $1 in benefits is withheld for every $3 of earnings in excess of the annual exempt amount. For beneficiaries under age 65, $1 in benefits is withheld for every $2 of earnings in excess of the annual exempt amount. Computation. Section 321(g) of the `Social Security Independence and Program Improvements Act of 1994' also amended the indexing formula provided in section 203(f)(8)(B) of the Act. Under the revised formula, each monthly exempt amount for 1995 shall be the larger of the corresponding 1994 monthly exempt amount or the corresponding 1994 monthly exempt amount multiplied by the ratio of the national average wage index for 1993 to that for 1992. The ratio of the national average wage index for 1993, $23,132.67 as determined above, compared to that for 1992, $22,935.42, is 1.0086002. Section 203(f)(8)(B) further provides that if the amount so determined is not a multiple of $10, it shall be rounded to the nearest multiple of $10. Exempt Amount for Beneficiaries Aged 65 Through 69. Multiplying the 1994 retirement earnings test monthly exempt amount of $930 by the ratio of 1.0086002 produces the amount of $938.00. This must then be rounded to $940. The retirement earnings test monthly exempt amount for beneficiaries aged 65 through 69 is determined to be $940 for 1995. The corresponding retirement earnings test annual exempt amount for these beneficiaries is $11,280. Exempt Amount for Beneficiaries Under Age 65. Multiplying the 1994 retirement earnings test monthly exempt amount of $670 by the ratio 1.0086002 produces the amount of $675.76. This must then be rounded to $680. The retirement earnings test monthly exempt amount for beneficiaries under age 65 is thus determined to be $680 for 1995. The corresponding retirement earnings test annual exempt amount for these beneficiaries is $8,160. Computing Benefits After 1978 General. The Social Security Amendments of 1977 provided a method for computing benefits which generally applies when a worker first becomes eligible for benefits after 1978. This method uses the worker's `average indexed monthly earnings' to compute the primary insurance amount. The computation formula is adjusted automatically each year to reflect changes in general wage levels, as measured by the national average wage index. A worker's earnings are adjusted, or `indexed,' to reflect the change in general wage levels that occurred during the worker's years of employment. Such indexation ensures that a worker's future benefits reflect the general rise in the standard of living that occurs during his or her working lifetime. A certain number of years of earnings are needed to compute the average indexed monthly earnings. After the number of years is determined, those years with the highest indexed earnings are chosen, the indexed earnings are summed, and the total amount is divided by the total number of months in those years. The resulting average amount is then rounded down to the next lower dollar amount. The result is the average indexed monthly earnings. For example, to compute the average indexed monthly earnings for a worker attaining age 62, becoming disabled before age 62, or dying before attaining age 62, in 1995, the national average wage index for 1993, $23,132.67, is divided by the national average wage index for each year prior to 1993 in which the worker had earnings. The actual wages and self-employment income, as defined in section 211(b) of the Act and credited for each year, is multiplied by the corresponding ratio to obtain the worker's indexed earnings for each year before 1993. Any earnings in 1993 or later are considered at face value, without indexing. The average indexed monthly earnings is then computed and used to determine the worker's primary insurance amount for 1995. Computing the Primary Insurance Amount. The primary insurance amount is the sum of three separate percentages of portions of the average indexed monthly earnings. In 1979 (the first year the formula was in effect), these portions were the first $180, the amount between $180 and $1,085, and the amount over $1,085. The dollar amounts in the formula which govern the portions of the average indexed monthly earnings are frequently referred to as the `bend points' of the formula. Thus, the bend points for 1979 were $180 and $1,085. The bend points for 1995 are obtained by multiplying the corresponding 1979 bend-point amounts by the ratio between the national average wage index for 1993, $23,132.67, and for 1977, $9,779.44. These results are then rounded to the nearest dollar. For 1995, the ratio is 2.3654391. Multiplying the 1979 amounts of $180 and $1,085 by 2.3654391 produces the amounts of $425.78 and $2,566.50. These must then be rounded to $426 and $2,567. Accordingly, the portions of the average indexed monthly earnings to be used in 1995 are determined to be the first $426, the amount between $426 and $2,567, and the amount over $2,567. Consequently, for individuals who first become eligible for old-age insurance benefits or disability insurance benefits in 1995, or who die in 1995 before becoming eligible for benefits, we will compute their primary insurance amount by adding the following: (a) 90 percent of the first $426 of their average indexed monthly earnings, plus (b) 32 percent of the average indexed monthly earnings over $426 and through $2,567, plus (c) 15 percent of the average indexed monthly earnings over $2,567. This amount is then rounded to the next lower multiple of $.10 if it is not already a multiple of $.10. This formula and the adjustments we have described are contained in section 215(a) of the Act (42 U.S.C. 415(a)). Maximum Benefits Payable to a Family General. The 1977 amendments continued the long established policy of limiting the total monthly benefits which a worker's family may receive based on his or her primary insurance amount. Those amendments also continued the then existing relationship between maximum family benefits and primary insurance amounts but did change the method of computing the maximum amount of benefits which may be paid to a worker's family. The Social Security Disability Amendments of 1980 (Pub. L. 96-265) established a new formula for computing the maximum benefits payable to the family of a disabled worker. This new formula is applied to the family benefits of workers who first become entitled to disability insurance benefits after June 30, 1980, and who first become eligible for these benefits after 1978. The new formula was explained in a final rule published in the FEDERAL REGISTER on May 8, 1981, at 46 FR 25601. For disabled workers initially entitled to disability benefits before July 1980, or whose disability began before 1979, the family maximum payable is computed the same as the old-age and survivor family maximum. Computing the Old-Age and Survivor Family Maximum. The formula used to compute the family maximum is similar to that used to compute the primary insurance amount. It involves computing the sum of four separate percentages of portions of the worker's primary insurance amount. In 1979, these portions were the first $230, the amount between $230 and $332, the amount between $332 and $433, and the amount over $433. The dollar amounts in the formula which govern the portions of the primary insurance amount are frequently referred to as the `bend points' of the family-maximum formula. Thus, the bend points for 1979 were $230, $332, and $433. The bend points for 1995 are obtained by multiplying the corresponding 1979 bend-point amounts by the ratio between the national average wage index for 1993, $23,132.67, and the average for 1977, $9,779.44. This amount is then rounded to the nearest dollar. For 1995, the ratio is 2.3654391. Multiplying the amounts of $230, $332, and $433 by 2.3654391 produces the amounts of $544.05, $785.33, and $1,024.24. These amounts are then rounded to $544, $785, and $1,024. Accordingly, the portions of the primary insurance amounts to be used in 1995 are determined to be the first $544, the amount between $544 and $785, the amount between $785 and $1,024, and the amount over $1,024. Consequently, for the family of a worker who becomes age 62 or dies in 1995 before age 62, the total amount of benefits payable to them will be computed so that it does not exceed: (a) 150 percent of the first $544 of the worker's primary insurance amount, plus (b) 272 percent of the worker's primary insurance amount over $544 through $785, plus (c) 134 percent of the worker's primary insurance amount over $785 through $1,024, plus (d) 175 percent of the worker's primary insurance amount over $1,024. This amount is then rounded to the next lower multiple of $.10 if it is not already a multiple of $.10. This formula and the adjustments we have described are contained in section 203(a) of the Act (42 U.S.C. 403(a)). Quarter of Coverage Amount General. The 1995 amount of earnings required for a quarter of coverage is $630. A quarter of coverage is the basic unit for determining whether a worker is insured under the Social Security program. For years before 1978, an individual generally was credited with a quarter of coverage for each quarter in which wages of $50 or more were paid, or an individual was credited with 4 quarters of coverage for every taxable year in which $400 or more of self-employment income was earned. Beginning in 1978, wages generally are no longer reported on a quarterly basis; instead, annual reports are made. With the change to annual reporting, section 352(b) of the Social Security Amendments of 1977 (Pub. L. 95-216) amended section 213(d) of the Act to provide that a quarter of coverage would be credited for each $250 of an individual's total wages and self-employment income for calendar year 1978 (up to a maximum of 4 quarters of coverage for the year). Computation. Under the prescribed formula, the quarter of coverage amount for 1995 shall be equal to the larger of the current amount of $620 or the 1978 amount of $250 multiplied by the ratio of the national average wage index for 1993 to that for 1976. The national average wage index for 1976 was previously determined to be $9,226.48. This was published in the FEDERAL REGISTER on December 29, 1978, at 43 FR 61016. The average wage index for 1993 is $23,132.67 as determined above. Section 213(d) further provides that if the amount so determined is not a multiple of $10, it shall be rounded to the nearest multiple of $10. Quarter of Coverage Amount. The ratio of the national average wage index for 1993, $23,132.67, compared to that for 1976, $9,226.48, is 2.5072043. Multiplying the 1978 quarter of coverage amount of $250 by the ratio of 2.5072043 produces the amount of $626.80, which must then be rounded to $630. Accordingly, the quarter of coverage amount is determined to be $630 for 1995. `Old-Law' Contribution and Benefit Base General. The 1995 `old-law' contribution and benefit base is $45,300. This is the base that would have been effective under the Act with out the enactment of the 1977 amendments. The base is computed under section 230(b) of the Act as it read prior to the 1977 amendments. The `old-law' contribution and benefit base is used by: (a) the Railroad Retirement program to determine certain tax liabilities and tier II benefits payable under that program to supplement the tier I payments which correspond to basic Social Security benefits, (b) the Pension Benefit Guaranty Corporation to determine the maximum amount of pension guaranteed under the Employee Retirement Income Security Act (as stated in section 230(d) of the Act), (c) Social Security to determine a year of coverage in computing the special minimum benefit, as described earlier, and (d) Social Security to determine a year of coverage (acquired whenever earnings equal or exceed 25 percent of the `old-law' base for this purpose only) in computing benefits for persons who are also eligible to receive pensions based on employment not covered under section 210 of the Act. Computation. The base is computed using the automatic adjustment formula in section 230(b) of the Act as it read prior to the enactment of the 1977 amendments, but with the revised indexing formula introduced by section 321(g) of the `Social Security Independence and Program Improvements Act of 1994.' Under the formula, the `old-law' contribution and benefit base shall be the larger of the current `old-law' base ($45,000) or the 1994 `old-law' base ($45,000) multiplied by the ratio of the national average wage index for 1993 to that for 1992. If the amount so determined is not a multiple of $300, it shall be rounded to the nearest multiple of $300. Amount. The ratio of the national average wage index for 1993, $23,132.67 as determined above, compared to that for 1992, $22,935.42, is 1.0086002. Multiplying the 1994 `old-law' contribution and benefit base amount of $45,000 by the ratio of 1.0086002 produces the amount of $45,387.01 which must then be rounded to $45,300. Accordingly, the `old-law' contribution and benefit base is determined to be $45,300 for 1995. OASDI Fund Ratio General. Section 215(i) of the Act provides for automatic cost-of-living increases in OASDI benefit amounts. This section also includes a `stabilizer' provision that can limit the automatic OASDI benefit increase under certain circumstances. If the combined assets of the OASI and DI Trust Funds, as a percentage of annual expenditures, are below a specified threshold, the automatic benefit increase is equal to the lesser of (1) the increase in the national average wage index or (2) the increase in prices. The threshold specified for the OASDI fund ratio is 20.0 percent for benefit increases for December of 1989 and later. The law also provides for subsequent `catch-up' benefit increases for beneficiaries whose previous benefit increases were affected by this provision. `Catch-up' benefit increases can occur only when trust fund assets exceed 32.0 percent of annual expenditures. Computation. Section 215(i) specifies the computation and application of the OASDI fund ratio. The OASDI fund ratio for 1994 is the ratio of (1) the combined assets of the OASI and DI Trust Funds at the beginning of 1994 to (2) the estimated expenditures of the OASI and DI Trust Funds during 1994, excluding transfer payments between the OASI and DI Trust Funds, and reducing any transfers to the Railroad Retirement Account by any transfers from that account into either trust fund. Ratio. The combined assets of the OASI and DI Trust Funds at the beginning of 1994 equaled $378,285 million, and the expenditures are estimated to be $324,516 million. Thus, the OASDI fund ratio for 1994 is 116.6 percent, which exceeds the applicable threshold of 20.0 percent. Therefore, the stabilizer provision does not affect the benefit increase for December 1994. Although the OASDI fund ratio exceeds the 32.0-percent threshold for potential `catch-up' benefit increases, no past benefit increase has been reduced under the stabilizer provision. Thus, no `catch-up' benefit increase is required. Dated: October 25, 1994 Donna E. Shalala, Secretary of Health and Human Services [FR Doc. 94-26819 Filed 10-28-94; 8:45am] BILLING CODE 4190-29-P This material was published in the Federal Register on October 31, 1994, at 59 FR 54464. G. GLOSSARY
H. STATEMENT OF ACTUARIAL OPINIONIt is my opinion that (1) the techniques and methodology used herein to evaluate the financial and actuarial status of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds are generally accepted within the actuarial profession; and (2) the assumptions used and the resulting actuarial estimates are, in the aggregate, reasonable for the purpose of evaluating the financial and actuarial status of the trust funds, taking into consideration the experience and expectations of the program. HARRY C. BALLANTYNE,
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