Summary Measures and Graphs

Description of Proposed Provision:
G5: Invest 15 percent of the OASI and DI Trust Fund reserves in equities (phased in 2025-2034), assuming an ultimate 2.3 percent annual real rate of return on equities. Thus, the ultimate rate of return on equities is the same as that assumed for Trust Fund bonds.

Estimates based on the intermediate assumptions of the 2024 Trustees Report
Summary Measures
Current law
[percent of payroll]		 Change from current law
[percent of payroll]		 Shortfall eliminated
Long-range
actuarial
balance		 Annual
balance in
75th year		 Long-range
actuarial
balance		 Annual
balance in
75th year		 Long-range
actuarial
balance		 Annual
balance in
75th year
-3.50 -4.64 0.00* 0.00 * 0%

graph of OASDI cost rates and income rates by year, under current law and provision. click on graph to view underlying data. graph of OASDI trust fund ratio by year, under current law and provision. click on graph to view underlying data.
* A change in the investment of trust fund reserves to include some equities affects the size of all summarized measures because increased "present-value" discounting reduces the weight on values for more distant future years. As a result, the magnitude of the current-law actuarial balance and the summarized effects of most proposals is reduced. Therefore, the size of the change in the long-range actuarial balance indicated here cannot be interpreted directly as a reduction in the shortfall. The actual reduction in the shortfall from equity investment depends on the amount of reserves that are available for investment throughout the period. For example, if provisions to change revenue or scheduled benefits resulted in a purely pay-as-you-go system (reserves just above zero throughout the period), then investment in equities would have no effect on the actuarial balance.