David Langer
100 West 57 Street
New York, N.Y. 10019

For additional information, contact David Langer, 212-986-2942

March 30, 2004

FOR IMMEDIATE RELEASE

ACTUARY ASSERTS SOCIAL SECURITY'S TRUSTEES REQUIRE INAPPROPRIATE ASSUMPTIONS FOR OFFICIAL COST PROJECTIONS

New study demonstrated long-term Social Security surpluses, not deficits, arise from assumptions that meet professional standards

On the bases of a new study published in March in the Society of Actuaries quarterly, Pension Section News, David Langer, a New York consulting actuary who has examined Social Security's financial status for the past eight years, declared "The official assumptions the trustees require their actuaries to use are deficient."

He said the study compared the $1,378 billion of trust fun assets at the end of 2002 with the trustee's projected amounts, on the bases of the low, intermediate, and high cost sets of assumptions, from the end of each year 1992-2001 also up to the end of 2002. He observed the official intermediate set greatly understates assets by an average of 20% for even short periods of six to ten years, while the low cost set is on target. He commented, "the intermediate set should thus be discarded and the low cost set become the intermediate set for official government use."

He declared the ramifications to be profound. "There is no long-term deficit. Instead of the trust running dry in 2041, as given in the trustee's 2003 report, there would be $18 trillion of assets, and an even larger amount at the end of 75 years. This suggests," he continued, "Social Security's normal retirement age can be amended back to age 65 from age 67, which is now being phased in." He also warned: "One political implication is a never-ending annual surplus, which the U.S. Treasury can borrow without the need for repayment, so long as benefits are paid in full."

Langer added he previously reported the Social Security actuaries never informed the public that the politically appointed trustees required assumptions that failed to meet actuarial standards of practice, thus opening the door to political manipulation. "Moreover," Langer concluded, "a second violation occurred when Social Security's chief actuary misled the public by not noting in his certification at the end of each trustee's report that the trustees make the final decisions on actuarial matters."

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