More retirement-related regulatory news for plan sponsors, including links to detailed information.
GAO: Social Security’s long-term strategy needed to address key management challenges
According to a report by the U.S. Government Accountability Office (GAO), the Social Security Administration (SSA) will experience management challenges in four key areas over the next decade.
• Human capital. SSA has not updated its succession plan since 2006 although the agency faces an ongoing retirement wave and hiring freeze which will make it difficult to respond to growing workload demands.
• Disability program issues. SSA faces ongoing challenges incorporating a more modern concept of disability into its programs, while balancing competing needs to reduce backlogs of initial and appealed claims and ensure program integrity.
• Information technology (IT). SSA has made strides in modernizing its IT systems to address growing workload demands, but faces challenges with these modernization efforts and correcting internal weaknesses in information security.
• Physical infrastructure. SSA is moving toward centralized facilities management, but the agency lacks a proactive approach to evaluating its office structure that will identify potential efficiencies, such as consolidating offices.
To read the entire GAO report, click here.
Social Security and Medicare trustees report for 2013
The U.S. Social Security Board of Trustees has released its annual report on the long-term financial status of the Social Security Trust Funds. The combined assets of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds are projected to become depleted in 2033, unchanged from last year, with 77% of benefits still payable at that time. The Disability Insurance Trust Fund will become depleted in 2016, also unchanged from last year’s estimate, with 80% of benefits still payable.
To read the entire report, click here.
The Medicare Trustees has projected that the trust fund that finances Medicare’s hospital insurance coverage will remain solvent until 2026, two years beyond what was projected in last year’s report.
A number of factors have contributed to the improved outlook, including lower-than-expected Part A spending in 2012, and lower projected Medicare Advantage program costs. Recent data from the Medicare Advantage program indicate that certain provisions of the Patient Protection and Affordable Care Act (ACA) will help reduce the growth of spending in this program by more than was previously projected. Partially offsetting these lower spending projections are somewhat lower projected levels of tax revenue.
The benefits of this slower growth accrue to both taxpayers and beneficiaries. For example, although the Part B premium for 2014 will not be determined until later this year, the preliminary estimate in the report indicates that it will remain unchanged from the 2013 premium.
Read the entire report here.
CBO report: The distribution of major tax expenditures in the individual income tax system
A number of exclusions, deductions, preferential rates, and credits in the U.S. federal tax system cause revenues to be much lower than they would be otherwise for any given structure of tax rates. Some of those provisions—in both the individual and corporate income tax systems—are termed “tax expenditures” because they resemble federal spending by providing financial assistance to specific activities, entities, or groups of people. Tax expenditures, like traditional forms of federal spending, contribute to the federal budget deficit; influence how people work, save, and invest; and affect the distribution of income.
A report by the Congressional Budget Office (CBO) examines how 10 of the largest tax expenditures in the individual income tax system in 2013 are distributed among households with different amounts of income.
To read the CBO entire report, click here.