2013 OASDI Trustees Report

 

B. TRUST FUND FINANCIAL OPERATIONS IN 2012

Table II.B1 shows the income, expenditures, and asset reserves for the OASI, the DI, and the combined OASI and DI Trust Funds in calendar year 2012.

 

Table II.B1.—Summary of 2012 Trust Fund Financial Operations

[In billions]

		OASI	DI	OASDI
Asset reserves at the end of 2011		$2,524.1	$153.9	$2,677.9
Total income in 2012		731.1	109.1	840.2
	Net payroll tax contributions	503.9	85.6	589.5
	Reimbursement from General Fund of the Treasury	97.7	16.5	114.3
	Taxation of benefits	26.7	.6	27.3
	Interest	102.8	6.4	109.1
Total expenditures in 2012		645.5	140.3	785.8
	Benefit payments	637.9	136.9	774.8
	Railroad Retirement financial interchange	4.1	.5	4.7
	Administrative expenses	3.4	2.9	6.3
Net increase in asset reserves in 2012		85.6	-31.2	54.4
Asset reserves at the end of 2012		2,609.7	122.7	2,732.3

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

In 2012, net payroll tax contributions accounted for 70 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 $110,100 in 2012. Table II.B2 shows the tax rates scheduled under current law for 2012.

 

In 2012, approximately 14 percent of OASI and DI combined Trust Fund income came from reimbursements from the General Fund of the Treasury. Public Law 112-78, the Temporary Payroll Tax Cut Continuation Act of 2011, and Public Law 112-96, the Middle Class Tax Relief and Job Creation Act of 2012, 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.

Three percent of OASI and DI combined Trust Fund income in 2012 came from subjecting up to 50 percent of Social Security benefits above specified levels to Federal personal income taxation, and 13 percent of OASDI income came from interest earned on investment of trust fund asset reserves. The Department of the Treasury invests trust fund reserves in interest-bearing securities of the U.S. Government. In 2012, the combined trust fund reserves earned interest at an effective annual rate of 4.1 percent. Almost 99 percent of expenditures from the combined OASI and DI Trust Funds in 2012 were retirement, survivor, and disability benefits totaling $774.8 billion. The financial interchange with the Railroad Retirement program was the source of a net payment of $4.7 billion from the combined OASI and DI Trust Funds, which was about 0.6 percent of total expenditures. The administrative expenses of the Social Security program were $6.3 billion, which was about 0.8 percent of total expenditures.

The trust fund investments provide a reserve to pay benefits whenever total program cost exceeds income. Trust fund reserves increased by $54.4 billion in 2012 because total income to the combined funds, including interest earned on trust fund reserves, exceeded total expenditures. At the end of 2012, the combined reserves of the OASI and the DI Trust Funds were 330 percent of estimated expenditures¹ for 2013. In comparison, the combined reserves at the end of 2011 were 341 percent of expenditures for 2012.

 

Table II.B2.—Payroll Tax Contribution Rates for 2012

[In percent]

	OASI	DI	OASDI
Payroll tax contribution rate for employees	3.59	0.61	4.20
Payroll tax contribution rate for employers	5.30	.90	6.20
Payroll tax contribution rate for self-employed persons	8.89	1.51	10.40

Note: Public Laws 112-78 and 112-96 reduced the OASDI payroll tax rate for 2012 by 2 percentage points for employees and for self-employed workers. These laws required that the General Fund of the Treasury reimburse the OASI and DI Trust Funds for these temporary reductions in 2012 payroll tax revenue.

 

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1

Estimated expenditures are based on the intermediate set of assumptions.