财税英语Unit07

Answers for understanding the text
• 1.ABCD • 2.CD • 3.ABC • 4.ACD • 5.B • 6.D
Unit Social Security
What is social security?
• Generally share 4 characteristics:
– Participation is mandatory – Eligibility and benefits depend on prior
Structure of Social Security
• Pay-as-you-go Financing • Explicit transfers • Benefit structure • Age at which benefits are withdrawn • Recipient’s family status • Financing
– Convert AIME into Primary Insurance Amount (PIA) – basic benefit payable to a work who retires at the “normal retirement age.”
– Benefit schedule is progressive, where lower-earners receive a higher proportion of previous earnings.
• Benefit Structure
– Average Indexed Monthly Earnings – are an individual’s average wages throughout their working life.
• Adjusted for inflation • Wages up to a ceiling • Only highest 35 years of earnings
• One effect of the Social Security program was to force the working poor to contribute something while they were working.
• Social Security has a strong redistribution element (a much higher ratio of benefits to earnings for lower income earners).
• Recipient’s family status
– For a single worker who retires at the normal retirement age, the monthly benefit equals PIA.
– A worker with a dependent spouse (or child) may receive an additional 50% of the PIA.
contributions – Benefits begin with an identifiable
occurrence – Programs are not means-tested
The features of social security
• OASDI is a hybrid of insurance, pension, and redistribution programs.
• Explicit transfers
– Supplemental Security Income (SSI) was enacted in 1972, and is administered by the Social Security Administration.
– More accurately viewed as a welfare program rather than social insurance.
• Pay-as-you-go Financing
– Benefits for current retirees come from payments made by current workers.
– Early recipients received very high returns on their contributions.