资源简介

(共25张PPT)
SOCIAL SECURITY AND
SOCIAL INSURANCE
C h a p t e r 8
Social Security in the U.S.
Social security and insurance programs include government-provided pensions, disability payments, unemployment compensation, and health benefits.
Eligibility for benefits usually contingent on paying a tax or having tax paid on one’s behalf by virtue of employment
Forty quarters of coverage (10 years of covered work) qualifies a worker for benefits
No means test is required to be eligible for benefits
Fully-Funded Pension Systems
Benefits are paid out of a fund built up from contributions by, or on behalf of, members in the retirement system.
Dollar value of the fund must equal at least the discounted present value of pensions promised in the future
Social Security uses revenue from payroll taxes to provide pensions; this is a tax-financed pension system.
- Old-Age, Survivors, and Disability Insurance (OASDI)
Pay-As-You-Go Pension Systems
Finance pensions for retired workers in a given year entirely by contributions or taxes paid by currently employed workers
Because bulk of payroll taxes financing Social Security in recent years has been used to pay pensions of currently retired workers, it has been characterized as a pay-as-you-go system.
Workers currently paying payroll tax expect future generations will be taxed similarly so that when they retire, they will receive a pension under Social Security.
Computation of Benefits
Normal retirement age, or age at which a worker is entitled to full Social Security retirement benefits, depends on year of birth, and is at 66 until the year 2017.
Earlier retirement results in benefit reduction
Monthly pension depends on a formula that calculates average indexed monthly earnings (AIME), which are based on workers’ average monthly earnings.
AIME is used to determine primary insurance amount (PIA).
Retired workers are subject to an earnings test, which reduces benefits by $1 for each $2 of earnings over a certain maximum amount of earnings.
Gross Replacement Rate
A worker’s monthly retirement benefit divided by monthly earnings in the year prior to retirement:
Gross Replacement Rate
Net Replacement Rate
Net replacement rate is a better measure of the generosity of Social Security pension benefits. NRRs are higher than GRRs.
Social Security and Other Pension Income
Social Security pensions account for about 38.6% of total income of people age 65 or over in the U.S.
About two-thirds of the elderly rely on Social Security for 54.1% of their income
Private and government pensions amount to 18.6%
Past savings account for less than 20%
For low-income retirees, Social Security amounts to 90% of their income
Intergenerational and Distributive Effects
The “deal” one gets with Social Security can depend upon varying tax rates over time.
Middle income person with no dependents retiring in 1970 received pension with discounted PV of $25,000 more than their taxes paid
Same person retiring in 2020 will pay $88,000 more in taxes than the discounted PV of pension received
Way in which GRRs vary with family status and income also affects benefits received by retired workers
Benefits compared with taxes paid are a better deal for low-income workers than upper-income workers
Demographic Change and Social Security
Maintenance of GRRs at legislated levels has required sharp increases in payroll taxes since 1970 to provide revenue for current and future pensions.
Toward the second half of the 21st century, Social Security trust fund will be drawn down rapidly to a forecasted negative balance by the middle of the century.
Issue is, the proportion of retirees relative to working population continues to increase.
In 2000, nearly 5 workers for each retiree.
By 2050, could fall to fewer than 2 workers per retiree.
If the money’s worth ratio for Social Security falls below one, it will cost workers more than they get from it.
Rise of Social Security Tax Rates
Social Security Reform
Option 1 – Maintain Benefits
Preserve Social Security in its current form with slight reductions in replacement rates
More inclusive taxation of benefits along with large-scale investment of Social Security tax proceeds in corporate stocks (up to 40% of collections)
Increase payroll tax in 2045
Least radical proposal
May, however, underestimate necessary tax increase needed to avoid benefit cuts
Social Security Reform
Option 2 – Individual Accounts
Raises retirement age for full benefits, reduces replacement rate for upper-income workers
Would create individual accounts equal to 1.6% of covered payrolls
Holders free to choose how to invest these accounts among stock and bond mutual funds
Pensions received based on amounts contributed by individuals and performance of funds
Raise in tax rates would be necessary
Social Security Reform
Option 3 – Personal Security Accounts
Portion of payroll tax paid by employers, 5%, allocated to trust fund dedicated to pay a guaranteed flat benefit to all retirees
The 5% paid by employees is allocated to individual “personal security account”
Account managed privately through investment companies
Most radical proposal, in the direction of privatization
Major transition issues
Social Security and Work Incentives
Social Security benefits reduce incentive that older workers may have to work beyond normal retirement age.
NRRs for workers with dependent spouses often more than 85% of previous earnings, generally supplemented with private pensions
Earnings test for workers below normal retirement age can affect amount of benefits received, regardless of entitlement.
Social Security and Work Incentives
Worker subject to the earnings test encounters a substitution effect when he works more than five hours per day; in equilibrium at point H:
Social Security and Work Incentives
Worker not subject to the earnings test finds his choices unaffected by a substitution effect unfavorable to work:
Social Security and Saving Incentives
It is argued that Social Security significantly reduces the rate of saving and capital formation in the economy.
Promise of a pension ensures an income for the worker’s retirement years
However, by enabling workers to retire earlier and discouraging work after retirement age, increases the retirement years of the worker.
Encouraging more saving to finance activities associated with greater period of nonwork
All in all, Social Security’s affect on saving has not been verified.
Asset-Substitution Effect
Social Security tax reduces annual savings from S to S’:
Asset-Substitution Effect
Social Security tax exceeds annual saving, saving falls to zero. Worker is worse off than if no Social Security system existed and he were allowed to retain enough current income to save for retirement.
Induced-Retirement Effect
Results from the fact that Social Security benefits and the earnings test for such benefits tend to provide incentives for early retirement and less work during retirement years
This, in turn, provides incentive for workers to save more for a more lengthy period of retirement
Could offset the asset-substitution effect, but it is also argued that it is far outweighed by the asset-substitution effect
Bequest Effect
Strong incentives for parents to leave bequests to their children
Argued that the existence of Social Security pensions provides incentives for the elderly to increase their saving to provide bequests for descendants
Also argued that Social Security pensions decrease the need for children to support their retired parents, increasing their saving over their working life
Medicare
Government-supplied health insurance for the elderly and some disabled workers
Part A is a program of hospital insurance financed by a special payroll tax
Part B is supplementary medical insurance for doctor’s services, diagnostic tests, and some home health care services
Pact C is a system of private health insurance plans that provide Part A, Part B, and usually prescription drug benefits to Medicare beneficiaries who choose to enroll in it.
Part D is an optional prescription drug program
Government-provided partially because of adverse selection – persons who have the greatest probability of obtaining benefits seek to obtain insurance and conceal information about their adverse conditions
Unemployment Insurance
Provides income support for those temporarily out of work because they have been laid off or have lost their jobs for reasons other than misconduct or a labor dispute
Managed by individual states and vary from state to state
Benefits received positively related to previous earnings
In recent years, proportion of unemployed actually receiving benefits has declined substantially
One can only lose benefits by refusing the offer of a suitable job

展开更多......

收起↑