SOCIAL SECURITY ADMINISTRATION BALTIMORE, MD 21235-0001

SOCIAL SECURITY

Office of the Chief Actuary

March 10, 2016

The Honorable Patrick Murphy

United States House of Representatives

Washington, D.C. 20515

Dear Representative Murphy:

I am writing in response to your request for estimates of the financial effects on Social Security 

of H.R. 4529, the Social Security Parent Penalty Repeal Act, which you introduced on February 

10, 2016. The estimates provided here reflect the intermediate assumptions of the 2015 Trustees 

Report. This Bill (hereafter referred to as the proposal) includes two provisions with direct 

effects on the Social Security Trust Funds. Note that the estimates provided here do not reflect 

the estimated effects of the Bipartisan Budget Act (BBA) of 2015, which was enacted after 

completion of the 2015 Trustees Report. Including the effects of the BBA would provide a small 

further improvement in the projected actuarial status of the Social Security Trust Funds. We have 

enjoyed working closely with Chris Fisher and Aimee Collins-Mandeville of your staff in 

developing this proposal to meet your goals. The estimates and analysis provided here reflect the 

combined effort of many in the Office of the Chief Actuary, but most particularly Karen Glenn, 

Christopher Chaplain, Daniel Nickerson, Kyle Burkhalter, Michael Clingman, and Anna 

Kirjusina.

The enclosed Table 1 provides estimates of the effects of the two provisions on the cost, income, 

and combined trust fund reserves for the Old Age, Survivors, and Disability Insurance (OASDI)

program. We estimate that enactment of the proposal would extend the projected year of reserve 

depletion from 2034 to 2038, under the intermediate assumptions of the 2015 Trustees Report. 

Because the OASI and DI Trust Funds are separate legal entities, estimates for the combined 

trust funds are consistent with an intent to reallocate the total tax rate as needed to equalize the 

years of reserve depletion and generally the actuarial status of the two separate trust funds. 

The proposal includes two basic provisions with direct effects on the OASDI program. The 

following summaries identify each provision with the corresponding section number in the Bill.

Section 2. Increase the taxable maximum by twice the rate of increase in the Average Wage 

Index, effective 2017.

Under current law, the taxable maximum is indexed to reflect the annual rate of change in the 

national Average Wage Index (AWI). However, the taxable maximum is never reduced from one 

year to the next, even if the AWI declines. Under this provision, the taxable maximum would be 
Page 2 – The Honorable Patrick Murphy

increased annually by twice the rate of increase in the AWI, but never by less than 3 percent. 

Additional earnings subject to the payroll tax above the current law maximum would be included 

for the worker's benefit computation.

We estimate that enactment of this provision alone would decrease the long-range OASDI 

actuarial deficit by 1.05 percent of taxable payroll and would decrease the annual deficit for the 

75th projection year (2089) by 1.48 percent of payroll.

Section 3. Reduce the number of computation years for individuals with a child in care in 

years for which the individual has no covered or non-covered earnings, for benefits paid in 

January 2017 and later.

This provision reduces a worker’s benefit computation years by the number of countable 

childcare years, where a countable childcare year is any year during which the individual was the 

primary caregiver for a child under 6 years of age for at least one half of the year and for which 

the individual’s total earnings for the year is zero. Only one parent can be declared the primary 

caregiver for a child in any given year. Each parent can earn at most 2 dropout years per child, 

and a maximum of 5 dropout years in total. The years designated as childcare years do not have 

to be the years that could otherwise be included in the computation of the average indexed 

monthly earnings (AIME) computation.

The provision would be effective for all benefits payable for entitlement in January 2017 and 

later (without regard for when the beneficiary became initially eligible). Any year starting with 

1951 can be used to qualify for an additional dropout year.

We estimate that enactment of this provision alone would increase the long-range OASDI 

actuarial deficit by 0.05 percent of taxable payroll and would increase the annual deficit for the 

75th projection year (2089) by 0.05 percent of payroll.

Estimates for the Proposal (Bill) as a Whole

Table 1 provides detailed annual projections of the financial operations of the OASDI program 

assuming enactment of the proposal in its entirety, and shows the estimated changes from levels 

of cost and income under current law. The year of reserve depletion for the combined OASDI 

Trust Funds would be extended by 4 years, from 2034 under current law to 2038. The table also 

shows summarized cost and income rates and the actuarial balance for the 75-year (long-range) 

period assuming enactment of the proposal.

The actuarial balance for the OASDI program over the 75-year projection period would be 

improved by 1.00 percent of taxable payroll, from an actuarial deficit of 2.68 percent of payroll 

under current law to an actuarial deficit of 1.68 percent of taxable payroll. The annual balance 

for the OASDI program for the 75th projection year (2089) would be improved by 1.43 percent of 

payroll.
Page 3 – The Honorable Patrick Murphy

We hope these estimates are helpful. Please let me know if we may provide further assistance.

Sincerely,

Stephen C. Goss

Chief Actuary

Enclosure
Year Cost Rate

Income

Rate

Annual

Balance Cost Rate

Income

Rate

Annual

Balance

2015 14.13 12.82 -1.31 308 0.00 0.00 0.00

2016 13.88 12.88 -1.00 298 0.00 0.00 0.00

2017 13.94 12.98 -0.96 279 0.05 0.07 0.02

2018 14.02 13.10 -0.92 263 0.05 0.16 0.12

2019 14.13 13.21 -0.93 249 0.05 0.25 0.21

2020 14.27 13.30 -0.98 235 0.05 0.33 0.28

2021 14.39 13.39 -1.01 222 0.05 0.40 0.35

2022 14.57 13.48 -1.09 209 0.05 0.47 0.42

2023 14.78 13.56 -1.22 197 0.05 0.52 0.47

2024 15.01 13.64 -1.37 184 0.05 0.58 0.52

2025 15.22 13.71 -1.51 172 0.06 0.63 0.58

2026 15.42 13.78 -1.65 160 0.06 0.68 0.62

2027 15.62 13.84 -1.78 148 0.06 0.73 0.66

2028 15.82 13.90 -1.92 136 0.07 0.77 0.70

2029 16.00 13.95 -2.05 124 0.07 0.81 0.74

2030 16.17 14.01 -2.16 112 0.08 0.85 0.78

2031 16.32 14.06 -2.26 99 0.08 0.89 0.81

2032 16.46 14.11 -2.35 87 0.09 0.93 0.85

2033 16.57 14.16 -2.41 73 0.09 0.97 0.88

2034 16.65 14.20 -2.45 60 0.10 1.01 0.91

2035 16.72 14.24 -2.48 46 0.10 1.04 0.94

2036 16.79 14.28 -2.51 32 0.11 1.08 0.97

2037 16.84 14.32 -2.51 18 0.12 1.11 1.00

2038 16.86 14.36 -2.50 3 0.13 1.15 1.02

2039 16.86 14.39 -2.47 ---- 0.13 1.18 1.05

2040 16.85 14.43 -2.43 ---- 0.14 1.21 1.07

2041 16.84 14.46 -2.38 ---- 0.15 1.24 1.09

2042 16.82 14.49 -2.34 ---- 0.16 1.27 1.11

2043 16.81 14.52 -2.29 ---- 0.17 1.30 1.13

2044 16.79 14.55 -2.25 ---- 0.18 1.33 1.15

2045 16.78 14.57 -2.21 ---- 0.19 1.36 1.17

2046 16.77 14.60 -2.17 ---- 0.20 1.39 1.19

2047 16.77 14.63 -2.14 ---- 0.21 1.41 1.20

2048 16.77 14.66 -2.11 ---- 0.22 1.44 1.22

2049 16.77 14.68 -2.09 ---- 0.23 1.46 1.23

2050 16.78 14.71 -2.07 ---- 0.24 1.49 1.25

2051 16.81 14.74 -2.07 ---- 0.26 1.51 1.26

2052 16.84 14.76 -2.08 ---- 0.27 1.54 1.27

2053 16.89 14.79 -2.10 ---- 0.28 1.56 1.28

2054 16.94 14.81 -2.13 ---- 0.30 1.58 1.29

2055 17.00 14.84 -2.16 ---- 0.31 1.61 1.30

2056 17.06 14.86 -2.20 ---- 0.33 1.63 1.30

2057 17.13 14.89 -2.24 ---- 0.34 1.65 1.31

2058 17.20 14.92 -2.29 ---- 0.36 1.67 1.31

2059 17.27 14.94 -2.33 ---- 0.37 1.69 1.32

2060 17.34 14.96 -2.37 ---- 0.39 1.71 1.33

2061 17.40 14.99 -2.42 ---- 0.40 1.73 1.33

2062 17.47 15.01 -2.46 ---- 0.41 1.75 1.34

2063 17.54 15.03 -2.51 ---- 0.43 1.77 1.34

2064 17.61 15.05 -2.55 ---- 0.44 1.79 1.34

2065 17.67 15.08 -2.60 ---- 0.46 1.81 1.35

2066 17.75 15.10 -2.65 ---- 0.47 1.82 1.35

2067 17.82 15.12 -2.70 ---- 0.49 1.84 1.35

2068 17.89 15.14 -2.75 ---- 0.50 1.86 1.36

2069 17.96 15.16 -2.80 ---- 0.51 1.88 1.36

2070 18.03 15.18 -2.85 ---- 0.53 1.89 1.36

2071 18.09 15.20 -2.90 ---- 0.54 1.91 1.37

2072 18.15 15.22 -2.93 ---- 0.55 1.92 1.37

2073 18.20 15.24 -2.97 ---- 0.57 1.94 1.37

2074 18.24 15.25 -2.99 ---- 0.58 1.95 1.37

2075 18.28 15.27 -3.01 ---- 0.59 1.97 1.38

2076 18.30 15.29 -3.01 ---- 0.60 1.98 1.38

2077 18.32 15.30 -3.02 ---- 0.61 2.00 1.39

2078 18.33 15.31 -3.01 ---- 0.62 2.01 1.39

2079 18.34 15.33 -3.01 ---- 0.63 2.03 1.39

2080 18.35 15.34 -3.01 ---- 0.64 2.04 1.40

2081 18.36 15.36 -3.01 ---- 0.65 2.05 1.40

2082 18.39 15.37 -3.02 ---- 0.66 2.07 1.41

2083 18.42 15.38 -3.03 ---- 0.67 2.08 1.41

2084 18.45 15.40 -3.06 ---- 0.68 2.09 1.41

2085 18.50 15.41 -3.08 ---- 0.69 2.10 1.42

2086 18.54 15.43 -3.12 ---- 0.70 2.11 1.42

2087 18.59 15.44 -3.15 ---- 0.71 2.13 1.42

2088 18.64 15.45 -3.19 ---- 0.72 2.14 1.42

2089 18.70 15.47 -3.23 ---- 0.72 2.15 1.43

2090 18.75 15.48 -3.27 ---- 0.73 2.16 1.43

Cost Rate Income Rate

Actuarial 

Balance

Change in 

Cost rate

Change in 

Income Rate

Change in 

Actuarial

Balance

16.82% 15.13% -1.68% 2038 0.27% 1.27% 1.00%

Office of the Chief Actuary

Based on Intermediate Assumptions of the 2015 Trustees Report. Social Security Administration

1 Under present law the year of combined Trust Fund reserve depletion is 2034.

Expressed as a percentage of present-law

taxable payroll Trust Fund

Ratio

1-1-year

Expressed as a percentage of present-law

taxable payroll

Representative Murphy H.R. 4529 "Social Security Parent Penalty Repeal Act" to Exclude Certain Childcare Years from the Benefit Computation Formula 

and Accelerate the Annual Increase in the Contribution and Benefit Base, Effective January 2017

Table 1 - OASDI Cost Rate, Income Rate, Annual Balance, and Trust Fund Ratio

Proposal Change from Present Law

March 10, 2016

Summarized Rates: OASDI

Year of reserve 

depletion1

Summarized Rates: OASDI

2015 - 2089