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Analyzing the possible merger of SSDI and OASI — Part I

Analyzing the possible merger of SSDI and OASI — Part I

| May 6, 2015 | Social Security Disability |

Many people in Newark, New Jersey, and in the rest of the United States are aware that both the Social Security Disability Insurance Trust Fund and the Old-Age and Survivors Insurance Trust fund are having financial difficulties. According to recent news reports, the SSDI trust fund may run out of funds by 2016. The OASI Trust Fund, on the other hand, is in slightly better shape, but even so, it may have no more funds by 2033.

In order to make an immediate change, there have been proposals from several quarters to transfer funds from the OASI to SSDI so that the SSDI program can resolve the financial issues and stand on its own. Although such transfers have happened in the past, experts believe that it cannot be viewed as a long-term solution to the problems that the SSDI trust and its millions of beneficiaries are experiencing.

Among the various concerns, the first is apprehension about the trust funds’ self-financing principles. At present, the funds are independent of each other. However, if SSDI and OASI merge, it would mean that only the Social Security Administration would have to sustain itself as there would not be any requirement for each individual program to stand on its own. This may seem secure but it may be difficult to determine the fiscal responsibility of each trust fund when it comes to the SSA as a whole.

Another concern is the perception that Americans have about SSD benefits from OASI benefits. Workers pay into the SSDI trust fund and receive benefits in the event of a disabling injury or illness, which means that some workers may receive substantial benefits from SSDI while others may receive nothing. The workers seem to accept this.

The OASI, on the other hand, has always been regarded as a mechanism for retirement savings and survivor benefits and every worker can take advantage of those benefits. Therefore, experts feel that if funds are suddenly transferred from OASI to SSDI, beneficiaries may become skeptical and vulnerable.

Source: Economics21.org, “Costs of Merging Social Security Retirement and Disability Funds,” Charles Blahous, April 27, 2015