2002 OASDI Trustees Report

2002 OASDI Trustees Report

B. TRUST FUND FINANCIAL OPERATIONS IN 2001

The table below shows the income and expenditures for the OASI, the DI, and the combined OASI and DI Trust Funds in calendar year 2001.

Table II.B1.—Summary of 2001 Trust Fund Financial Operations
Type of income or expenditure		Amount in calendar year 2001 (in billions)
Type of income or expenditure		OASI	DI	OASDI
Total income		$518.1	$83.9	$602.0
	Net contributions	441.5	74.9	516.4
	Taxation of benefits	11.9	.8	12.7
	Interest	64.7	8.2	72.9

Total expenditures		377.5	61.4	438.9
	Benefit payments	372.3	59.6	431.9
	Railroad Retirement financial interchange	3.3	^1/	3.3
	Administrative expenses	2.0	1.7	3.7

¹ Less than $50 million.

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

In 2001, 86 percent of total income to the trust funds consisted of taxes paid by employees, employers and the self-employed on earnings covered by the Social Security program. These taxes were paid on covered earnings up to a specified maximum annual amount, called the contribution and benefit base, which was $80,400 in 2001 and is increased each year automatically as the average wage in the U.S. increases. The tax rates scheduled under current law for 2001 and later are shown in table II.B2.

Table II.B2.—Tax Rates for 2001 and Later
	OASI	DI	OASDI
Tax rate for employees and employers, each (in percent)	5.30	0.90	6.20
Tax rate for self-employed persons (in percent)	10.60	1.80	12.40

Income tax revenue that results from subjecting up to 50 percent of Social Security benefits to Federal personal income taxation is credited to the OASI and DI Trust Funds and provided 2 percent of total income in 2001.¹ The final major source of income to the trust funds is interest earned on their invested assets. By law these assets are invested in interest-bearing securities of the U.S. Government or in other securities guaranteed for both principal and interest by the U.S. Government. In 2001 the combined trust fund assets earned interest at an effective annual rate of 6.6 percent. During the same period, the average interest rate on new securities purchased by the trust funds was 5.2 percent. This interest income provided 12 percent of total combined trust fund income.

Over 98 percent of expenditures from the combined OASI and DI Trust Funds in 2001 went to pay retirement, survivor and disability benefits totaling $431.9 billion. The financial interchange with the Railroad Retirement program resulted in a payment of $3.3 billion from the combined OASI and DI Trust Funds in 2001, or about 0.7 percent of total expenditures. The administrative expenses of the Social Security program were $3.7 billion in 2001, or about 0.8 percent of total expenditures in the year.

Assets of the trust funds increased by $163.1 billion in 2001 because income to each fund exceeded expenditures, as shown in table II.B3.

Table II.B3.—Trust Fund Results in 2001
[In billions]
		OASI	DI	OASDI
Assets (end of 2000)		$931.0	$118.5	$1,049.4
Income during 2001		518.1	83.9	602.0
Outgo during 2001		377.5	61.4	438.9
	Net increase in assets	140.6	22.5	163.1
Assets (end of 2001)		1,071.5	141.0	1,212.5

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

The assets of each trust fund are intended to provide a reserve that can be used to pay benefits in years when expenditures exceed income due to, for example, a temporary downturn in the economy. Such reserves allow for time to enact legislation to correct unanticipated shortfalls, when needed, without disruption of the timely payment of benefits. At the end of 2001, the combined assets of the OASI and the DI Trust Funds were 261 percent of estimated expenditures for the following year.

¹ The Medicare Hospital Insurance Trust Fund receives the additional revenue from subjecting up to 85 percent of benefits to Federal personal income taxation.


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