2007 OASDI Trustees Report

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II. OVERVIEW

B. TRUST FUND FINANCIAL OPERATIONS IN 2006

The table below shows the income, expenditures, and assets for the OASI, the DI and the combined OASDI Trust Funds in calendar year 2006.

Table II.B1.-Summary of 2006 Trust Fund Financial Operations
 
Amounts (in billions)
OASI
DI
OASDI
Assets at the end of 2005
$1,663.0
$195.6
$1,858.7
Total income in 2006
642.2
102.6
744.9
 
Net contributions
534.8
90.8
625.6
 
15.6
1.2
16.9
 
91.8
10.6
102.4
Total expenditures in 2006
461.0
94.5
555.4
 
454.5
91.7
546.2
 
3.5
.4
3.8
 
Administrative expenses
3.0
2.3
5.3
Net increase in assets in 2006
181.3
8.2
189.5
Assets at the end of 2006
1,844.3
203.8
2,048.1

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

In 2006, net contributions accounted for 84 percent of total trust fund income. Net contributions consist of taxes paid by employees, employers and the self-employed on earnings covered by Social Security. These taxes were paid on covered earnings up to a specified maximum annual amount, which was $94,200 in 2006 and is increased each year automatically (to $97,500 in 2007) as the average wage increases. The tax rates scheduled under current law for 2006 and later are shown in table II.B2.

Table II.B2.-Tax Rates for 2006 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

Two percent of OASDI Trust Fund income came from subjecting up to 50 percent of Social Security benefits above specified levels to Federal personal income taxation, and 14 percent of OASDI income came from interest earned on investment of OASDI Trust Fund reserves. Social Security's assets are invested in interest-bearing securities of the U.S. Government. In 2006 the combined trust fund assets earned interest at an effective annual rate of 5.3 percent. More than 98 percent of expenditures from the combined OASDI Trust Funds in 2006 went to pay retirement, survivor, and disability benefits totaling $546.2 billion. The financial interchange with the Railroad Retirement program resulted in a payment of $3.8 billion from the combined OASDI Trust Funds, or about 0.7 percent of total expenditures. The administrative expenses of the Social Security program were $5.3 billion, less than 1.0 percent of total expenditures.

Assets of the trust funds provide a reserve to pay benefits whenever total program cost exceeds income. Trust fund assets increased by $189.5 billion in 2006 because income to each fund exceeded expenditures. At the end of 2006, the combined assets of the OASI and the DI Trust Funds were 345 percent of estimated expenditures for 2007, up from an actual level of 335 percent at the end of 2005.


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