Old-Age, Survivors, and Disability Insurance: Administrative Expenses

THE ADMINISTRATION of the old-age, survivors, and disability insurance program has never cost more than a small proportion of contribution income-2-3 percent in most years. Administrative costs are also small by another measure; as a proportion of the total taxable payroll on which contributions are based, they are less than ‘/ of 1 percent. The costs are met from two funds-the old-age and survivors insurance trust fund and the disability insurance trust fund. These funds, though similar, are operated separately. Into the disability insurance trust, fund established by the 1956 amendments to the Social Security Act are paid the proceeds from the additional contributions required under that legislation to meet the cost of the disability benefits. The combined employer-employee contribution rate for this purpose was initially set at 0.50 percent of earnings, but it, was increased in the 1965 amendments to 0.70 percent. The selfemployed contribution rate has always been 25 percent lower than the combined employeremployee rate. The maximum annual earnings to which these rates are applicable was increased in 1959 from $4,200 to $4,800 and in 1966 to $6,600. Contributions for the old-age and survivors insurance portion of the program are paid into the old-age and survivors insurance trust fund. The combined employer-employee rate for old-age and survivors insurance and disability insurance purposes at the present time is 7.7 percent of earnings up to $6,600 a year, and for the selfemployed the rate is 5.8 percent. These rates are scheduled to rise in 1967, in 1969, and 1973, reaching an ultimate level of 9.7 percent and 7.0 percent respectively. Contributions for the oldage and survivors insurance program represent the difference between the contributions from these rates and those that go into the disability insurance trust fund. The trust funds are credited with receipts from