Social Security Trust Fund
The Social Security Trust Fund is the United States federal government's means of saving up workers' paid-in contributions in excess of current payments to cover retirement payouts in coming years. Unlike private pension funds, Social Security system is a pay as you go system, which means that payments to current retirees come primarily from current payments into the system. Because of the age structure of the American workforce, particularly baby boomers, current income is in excess of current payments, and the surplus goes into the trust fund. As the baby boomers age, Social Security is expected to go into deficit, and the extra money need to pay for retired baby boomers will come from the trust fund.The relationship between the Social Security Trust Fund and the national debt requires some explanation. As of the early 21st century, the amount raised by the Social Security taxes are in excess of the payments to recipients of social security. Hence in calculations of government spending, it is tempting to include those budget surpluses in government accounts. However, this is problematic because Social Security will go into deficit by 2015, and hence if Social Security surpluses are used to balance the current budget, extra funds will be needed when Social Security goes into deficit.
The FY 2000 budget put the issue very clearly:
These [Trust Fund] balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense. ... They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large Trust Fund balances, therefore, does not, by itself, have any impact on the Government’s ability to pay benefits. Source: FY 2000 Budget, Analytical Perspectives, p. 337
Board of Trustees of the Social Security Trust Fund
The Board of Trustees is made up of 6 members. 4 are automatically members because of the office they hold in the Federal Government. These 4 are:- United States Secretary of the Treasury (the Managing Trustee)
- Commissioner of Social Security
- United States Secretary of Health and Human Services
- United States Secretary of Labor
