What Is the Old-Age and Survivors Insurance (OASI) Trust Fund?
The Old-Age and Survivors Insurance Trust Fund (OASI) is a U.S. Treasury account that is used to deposit tax receipts that fund Social Security benefits paid to retired workers, their surviving spouses, and eligible children. In order words, the OASI is the long name of Social Security. The fund is managed by the Social Security Administration (SSA), which holds the authority to distribute OASI Trust Fund benefits to eligible parties.
- The Old-Age and Survivors Insurance (OASI) Trust Fund is a Treasury account used to pay out Social Security benefits.
- The fund holds deposits from the Federal Insurance Contributions Act (FICA) and the Self-Employment Contributions Act (SECA) taxes.
- The fund held $2.78 trillion as of 2018.
How the OASI Trust Fund Works
Taxes received under the Federal Insurance Contributions Act (FICA) and the Self-Employment Contributions Act (SECA) are deposited daily into the OASI Trust Fund. The SSA invests these funds, held in trust, and other resources that are not required for current expenses into interest-bearing federal securities. The interest earned is, in turn, deposited into the fund.
The fund's Board of Trustees consists of six members, two of whom are appointed by the president and confirmed by the Senate. The remaining four positions are held by four Cabinet-level officials. These are the secretary of the Treasury, the secretary of the Department of Labor, the secretary of Health and Human Services, and the Social Security commissioner.
The Old-Age and Survivors Insurance Trust Fund, created Jan.1, 1940, was an outgrowth of the Social Security Act amendments of 1939. At the end of 2018, the reserve amount in the OASI Trust Fund was $2.78 trillion. The fund generated $831 billion in income that year while spending $853 billion in expenses, for a net loss of $22.4 billion. The fund is invested at all times, but must be invested in assets that are guaranteed by the Federal government. The trust fund’s assets earned an effective interest rate of nearly 3% for 2017. The OASI Trust Fund redeems or sells securities to make benefit payments or to pay other expenses.
The funds of the OASI Trust Fund are held in a separate account at the Treasury. The fund has automatic spending authority when it comes to paying monthly benefits; that is, the fund doesn’t need to make special requests to Congress to pay benefits. The OASI Trust Fund has been an important tool for supporting citizens, with a large part of the government’s expenditures being either Medicare or Social Security.
Limitations of the OASI Trust Fund
The biggest drawback of the OASI Trust Fund is that it will eventually run out of money, based on comments from the Social Security Administration’s trustees. The fund is expected to run out of money by 2035. Now, even if this happens, it’s believed that Congress will still pay Social Security benefits at a reduced amount. Congress is expected to continue paying payroll taxes the government receives as Social Security benefits.