Discussion with 

Representatives of North Macedonia

OFFICE OF THE CHIEF ACTUARYUNITED STATES SOCIAL SECURITY ADMINISTRATIONMAY 24, 2023
Nature of the Social Security Program in the United S

Provide basic benefits for retirement, disability, and survivo

◦ Floor of protection—to be augmented with employer benefits and/◦ Employer “defined benefit” plans have been replaced with “define

contribution” plans—“de-risking”

Financing and actuarial status

◦ Financing primarily from payroll tax of 12.4% on up to $160,200 in ◦ Benefits based on career-average earnings level “wage-indexed” to 

◦ Indexed by price increases after initial eligibility

◦ “Pay as you go” financing dependent on workers per beneficiary
Office of the Chief Actuary’s Core Policy and Analytic

The Office of the Chief Actuary (OCACT) develops projectionactuarial status for the US Social Security Old-Age, SurvivorsDisability Insurance (OASDI) program

◦ Annual reports on current-law status since 1941 for the Board of Tr◦ Semiannual projections for President’s Budget

OCACT works with policymakers on developing potential chestimating effects

◦ Changes in law to improve “solvency” of the program—increase rev

reduce benefits

◦ Changes in regulations to modify implementation of current law
Baseline (Current-Law) Long-Term Assumptions and 

Projections—Work with Board of Trustees and Their OCACT develops assumptions and proposes them to the BoTrustees

◦ Subject to approval by the Trustees◦ Actuarial opinion required in the report attesting to “reasona

OCACT develops methods for projections

◦ We use multiple models

◦ Macro (deterministic) ◦ Stochastic◦ Microsimulation
Solvency: OASI+DI 

Trust Fund Reserve Depletion in 2034 (one year earlier than last year)Reserve depletion date varied from 2029 to 2042 in reports over the past 30 years (1994-2023).DI Trust Fund alone: reserves do not deplete, due largely to continued low recent and near-term disability applications and awards.
OASDI Annual Cost 

and Non-Interest Income as Percent of Taxable PayrollPersistent negative annual cash-flow balance starting in 2010.80 percent of scheduled benefits still payable at trust fund reserve depletion.Annual deficit in 2097: 4.35 percent of payroll: 0.09 percent larger than last year.
Selection and Validation of Appropriate Economic a

Demographic AssumptionsBased on past experience, considering past conditions anfuture conditions

◦ Not a simple extrapolation of past trend or average level◦ Essential to state assumptions and basis for expectation◦ Sensitivity analysis of possible changes in assumptions

When making changes in assumptions: incremental, grad

◦ Consistency and stability of assumptions and projections is i

Consult with Trustees plus auditors and numerous demogeconomists, and other actuaries
Aging –

Change in Age DistributionThe primary reason for increasing cost relative to payroll and GDP. Mainly due to drop in birth rates.
Updates to Policymakers: Current Law and Proposals 

Inform policymakers annually on actuarial status of Trust Fudegree of any imbalance, shortfall of future financing undeDevelop and re-estimate proposals to change law and regu

◦ As new proposals are desired by policymakers, based on THEI◦ Also update annually effects of past proposals considered◦ Thus providing a wide range of potential changes for different 

Provide effects on Trust Fund sufficiency, on cost relative to GDP, implications for the Federal Budget, and implications flevels
Managing Public Expectations About Income Replace

Expected From Social SecurityBenefit replacement rates: Vary by career earnings level, and by solvency (adequac
Lessons on Communication From Previous Experienc

Language and context essentialExample 1:

◦ Trust fund reserve depletion means continuing tax income is i

to fully pay scheduled benefits—NOT trust fund “running out 

Example 2:

◦ If trust fund reserves become depleted, then full benefits wou

payable

◦ But others say the shortfall would be covered from general fe

revenue increasing federal debt—which is NOT true under cu
North Macedonia Strives to Build Actuarial Capacity—

Roles and Responsibilities That Should Be Created InDemographic models and assumptions

◦ Birth, death, marriage, immigration, disability rates

Economic models and assumptions

◦ Employment rates and assumed growth in prices and earning◦ Expectations for “real growth” in worker productivity and ear

Models for programmatic expectations

◦ Ages at retirement, rates and prevalence of disability
Building and Maintaining Capacity in our Unit and Am

Stakeholders Who Need to Understand the Modeling Must maintain a fully competent team of actuaries, demogeconomistsMust maintain models that fully project all financial aspects programMust recruit new staff and maintain experienced staff, anticretirements with new hires to be assimilated into the team
For More Information Go To https://www.ssa.gov/oa

There you will find:

• The 2023 and all prior OASDI Trustees Reports• Detailed single-year tables for recent reports• Our estimates for comprehensive proposals and individual provis• Actuarial notes; including replacement rates• Actuarial studies; including stochastic• Extensive databases• Congressional testimonies• Presentations by OCACT employees