Summary: Pursuant to a congressional request, GAO reviewed the Pricewaterhouse Coopers (PwC) report on the actuarial projections for the trust funds of the Old Age, Survivors, and Disability Insurance programs, focusing on whether the Social Security Administration's (SSA) Board of Trustees': (1) 1999 long-range intermediate actuarial projections--their best estimates--as presented in the Trustees' 1999 report are based on generally accepted actuarial methods and techniques and include economic and demographic assumptions that contain no material defects because of errors or omissions and are individually reasonable; and (2) sensitivity tests include all assumptions that could have a significant effect on the projections and are reasonable.
GAO noted that: (1) PwC found that the actuarial methods and techniques used in preparing the long-range intermediate projections of the Social Security trust funds were sound; (2) it also found that the assumptions used in preparing the projections in the Trustees' report were individually reasonable at the time of the projections; (3) 7 months after the Trustees' 1999 report, on October 28, 1999, the Department of Commerce's Bureau of Economic Analysis released revised estimates of gross domestic product and other economic indicators for the period from 1959 through the second quarter of 1999; (4) PwC noted that these revisions may affect some economic assumptions and as a result, some assumptions may no longer be reasonable for future reports; (5) according to SSA officials, SSA actuaries have already begun reviewing the impact of these revisions for the Trustees' 2000 projections; (6) with regard to one of the demographic assumptions--mortality--the recent Technical Panel report concluded that the long-range cost of the Social Security system as currently designed is likely to be higher than previously projected; (7) the panel based its conclusions largely on indications that life expectancy will increase faster in the next century than currently assumed by the Trustees; (8) in contrast, PwC concluded that in the aggregate, the mortality assumptions used by the Trustees were reasonable; and (9) in addition, the sensitivity tests shown in the Trustees' report were reasonable.
