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Summary of Provisions That Would Change the Social Security Program
Solvency Provisions

Description of Proposed Provisions:
Provisions Affecting Level of Monthly Benefits (PIA)

Estimates based on the intermediate assumptions of the 2008 Trustees Report

  Change from present law Results with this provision
Long-range
actuarial
balance		 Annual
balance in
75th year		 Long-range
actuarial
balance		 Annual
balance in
75th year
Present Law, Alternative II.
 -1.70 -4.20
B1 Increase the number of years used to calculate benefits for retirees and survivors (but not for disabled workers) from 35 to 38, phased in 2009-2013.
graph | table | pdf-graph | pdf-table 		0.31 0.44 -1.39 -3.76
B2 Increase the number of years used to calculate benefits for retirees and survivors (but not for disabled workers) from 35 to 40, phased in 2009-2017.
graph | table | pdf-graph | pdf-table 		0.49 0.75 -1.20 -3.45
B3 For each year from 2009-2039, multiply the 32 and 15 percent formula factors by 0.987, reducing the factors to 21 percent and 10 percent respectively, for new eligibles in 2039 and later.
graph | table | pdf-graph | pdf-table 		1.55 2.98 -0.15 -1.22
B4 Reduce benefits by 3 percent for those newly eligible for benefits in 2009 and later.
graph | table | pdf-graph | pdf-table 		0.36 0.50 -1.34 -3.70
B5 Reduce benefits by 5 percent for those newly eligible for benefits in 2009 and later.
graph | table | pdf-graph | pdf-table 		0.60 0.83 -1.09 -3.37
B6 Beginning with those newly eligible for OASDI benefits in 2015 and later, reduce PIA formula factors so that benefits grow by inflation rather than by increases in real wages.
graph | table | pdf-graph | pdf-table 		2.30 7.18 0.60 2.97
B7 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2015. Create new bend point at the 30th percentile of earners. Maintain current-law benefits for earners at the 30th percentile and below and reduce upper 2 formula factors (32% and 15%) such that maximum worker benefit grows by inflation rather than the growth in average wages.
graph | table | pdf-graph | pdf-table 		1.36 4.13 -0.34 -0.08
B8 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2015. Create new bend point at the 40th percentile of earners. Maintain current-law benefits for earners at the 40th percentile and below and reduce upper 2 formula factors (32% and 15%) such that maximum worker benefit grows by inflation rather than the growth in average wages.
graph | table | pdf-graph | pdf-table 		1.15 3.47 -0.55 -0.73
B9 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2015. Create new bend point at the 50th percentile of earners. Maintain current-law benefits for earners at the 50th percentile and below and reduce upper 2 formula factors (32% and 15%) such that maximum worker benefit grows by inflation rather than the growth in average wages.
graph | table | pdf-graph | pdf-table 		0.93 2.65 -0.77 -1.55
B10 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASDI benefits in 2015. Create new bend point at the 60th percentile of earners. Maintain current-law benefits for earners at the 60th percentile and below and reduce upper 2 formula factors (32% and 15%) such that maximum worker benefit grows by inflation rather than the growth in average wages.
graph | table | pdf-graph | pdf-table 		0.68 1.69 -1.02 -2.51
B11 Beginning with those newly eligible in 2016, multiply the 90 and 32 PIA factors each year by 0.9925 and 0.982, respectively. Stop reductions in 2053. Beginning with those newly eligible in 2011, multiply the 15 factor by 0.982. Stop reduction of the 15 factor in 2048. DI will have present law scheduled benefit and proportional reduction at conversion to retired worker benefits at normal retirement age, based on years of disability.
graph | table | pdf-graph | pdf-table | memo 		2.06 5.33 0.36 1.13
B12 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2015. Create new bend point at the 30th percentile of earners. Maintain current-law benefits for earners at the 30th percentile and below and reduce upper 2 formula factors (32% and 15%) such that maximum worker benefit grows by inflation rather than the growth in average wages. Disability benefits are not affected by the proposal. Disabled worker beneficiaries, upon attaining normal retirement age, would be subject to a proportional reduction in benefits based on the worker's years of disability.
graph | table | pdf-graph | pdf-table | memo 		1.18 3.61 -0.52 -0.59
B13 For OASI beneficiaries becoming eligible for benefits in 2021 and later, multiply the PIA factors by the ratio of life expectancy at 67 for 2016 to the life expectancy at age 67 for the 4th year prior to the year of benefit eligibility. Unisex life expectancies, based on period life tables, would be used as projected by SSA's Office of the Chief Actuary. Disability benefits are not affected by the proposal. Disabled worker beneficiaries, upon attaining normal retirement age, would be subject to a proportional reduction in benefits based on the worker's years of disability.
graph | table | pdf-graph | pdf-table | memo 		0.47 1.71 -1.23 -2.49
B14 Progressive price indexing of PIA formula factors beginning with individuals newly eligible for OASI benefits in 2016. Create new bend point at the 30th percentile of earners. Maintain current-law benefits for earners at the 30th percentile and below and reduce upper 2 formula factors (32% and 15%) such that maximum worker benefit grows by inflation rather than the growth in average wages. Disability benefits are not affected by the proposal. Disabled worker beneficiaries, upon attaining normal retirement age, would be subject to a proportional reduction in benefits based on the worker's years of disability.
graph | table | pdf-graph | pdf-table | memo 		1.13 3.55 -0.57 -0.65
B15 Increase the PIA to a level such that a worker with 30 years of earnings at the minimum wage level would receive an adjusted PIA equal to 120 percent of the Federal poverty level for an aged individual. This provision would take full effect for all newly eligible OASDI workers in 2025, and would be phased in for new eligible in 2016 through 2024. The percentage increase in PIA would be lowered proportionately for those with fewer than 30 years of earnings, down to no enhancement for workers with 20 or fewer years of earnings. (Year-of-work requirements are "scaled" for disabled workers based on their years of potential work from age 22 to benefit eligibility). The benefit enhancement percentage would be reduced proportionately for workers with higher average indexed monthly earnings (AIME), down to no enhancement for those with AIME at least twice that of a 35-year steady minimum wage earner.
graph | table | pdf-graph | pdf-table | memo 		-0.04 0.00 -1.74 -4.21
B16 For all individuals becoming eligible for OASDI benefits in 2009 and later use a new, modified primary insurance amount (PIA) formula. The new formula would use an additional bend point placed between the current 2 bend points. The additional bend point would be equal to the current lower bend point plus 75 percent of the difference between the current bend points. (The new bend point would be at about the 58th percentile of average career earnings levels for new retired worker beneficiaries.) The PIA factor for dollars of average monthly indexed earnings (AIME) between the new bend point and the upper bend point would be lowered from 32 to 20 percent. The PIA factor applied for dollars of AIME above the upper bend point would be lowered from 15 to 10 percent.
graph | table | pdf-graph | pdf-table 		0.28 0.34 -1.41 -3.86
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Last reviewed or modified July 16, 2008