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Minimum Benefits in Social Security |
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In light of Social Security reform proposals that include provisions for minimum benefits, this paper considers the redistributive purpose of Social Security and whether a minimum benefit may reduce need among aged and disabled people more equitably or efficiently than current law structures. We find that minimum benefits could help reduce poverty among the aged substantially, even in the context of benefit reductions to improve the program's long-term fiscal deficit. In 1998, the bipartisan National Commission on Retirement Policy advanced a reform proposal that contained a minimum benefit within Social Security. Little effort, however, has been made to develop the rationale for a minimum benefit or to examine alternative designs. As a consequence, the design of a minimum benefit---or, for that matter, of almost all redistributive formulas within Social Security---has seldom been based on any theoretical or empirical notion of exactly what goals are sought and what types of formulaic adjustments would best achieve them. We make roughly fiscally equivalent comparisons assuming a system that is reduced relative to scheduled benefits because of Social Security's long-term fiscal deficit (OASDI Board of Trustees 2005).
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