Ch08 SOCIAL SECURITY AND SOCIAL INSURANCE（课件）- 《财政金融英文版》同步教学（人民大学版）

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. Gros