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Treasury Releases Report on Social Security Reform and Pre-Funding

The U.S. Treasury Department has released "Social Security Reform: Mechanisms for Achieving True Pre-Funding," the fourth report in a series of Treasury issue briefs on Social Security reform. It expands on a point introduced in the second issue brief; namely, that making Social Security reform fair to future generations requires building up and safeguarding resources in the near term that can be used to fund future benefits as the number of retirees per worker increases. As was discussed in the second brief, there is nothing currently in place to prevent current contributions in excess of current benefits from being unwound by larger deficits in the non-Social Security portion of the federal budget. This brief reviews the need for true pre-funding and its implications for reforms that achieve a financially sustainable Social Security system.

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