Enhancements Introduced in Current 2/17/16 Version of PSG Models
Rename GEMINI .sum output statistic earn50 to earnAA and add to GEMINI
STATS table a new input parameter called earnAA_age. The baseline
value of STATS.earnAA_age is 50, so the .sum output file is unchanged
unless the value of STATS.earnAA_age is changed. This enhancement
simply allows the output of earnings at ages other than fifty.
Enhancements Introduced in Earlier 2/5/16 Version of PSG Models
Add three new GEMINI STATS table input parameters that control how
average-final-earnings replacement rates are computed. The Social
Security Advisory Board's 2015 Technical Panel on Assumptions and
Methods recommended to the SSA Office of the Chief Actuary that the
annual Trustees Report include replacement rates that are expressed as
a percent of average final lifetime earnings. Pages 83-85 of the
Technical Panel's final report contain
their recommendations and some preliminary results. Recently CBO has
adopted a version of the Panel's recommendation and presented
replacement rates expressed as a percent of average final substantial
lifetime earnings in the recent CBO's 2015
Long-Term Projections for Social Security: Additional Information
report on pages 3-4 and
16. The three new GEMINI STATS table input parameters allow users of
the PSG models to calculate a wide range of these kinds of
average-final-earnings replacement rates. The three new parameters do
not change any output statistics generated by prior versions of
GEMINI.
The first new GEMINI input parameter
is STATS.eh_awi_pct, which determines how large annual earnings
must be to count that year as a lifetime earnings year. CBO computes
replacement rates only for individuals who have at least twenty years
in which annual earnings are at least ten percent of that year's AWI.
The value of this new parameter is 10 in the PSG benchmark runs, which
is the same as used by CBO.
The second new GEMINI input parameter
is STATS.rr_aie_pct, which determines how large annual earnings
must be to considered substantial, and therefore, be included in the
average of final earnings, which is the denominator in these
replacement rate statistics. CBO includes in the average only annual
earnings whose real (age 62 dollars) value is at least fifty percent
of the individual's AIME*12. The value of this new parameter is 50 in
the PSG benchmark runs, which is the same as used by CBO.
The third new GEMINI input parameter
is STATS.rr_n_years, which determines how many substantial
earnings years are included in the average. CBO includes five of the
most recent (that is, final) substantial earnings years in the
average. The value of this new parameter is 5 in the PSG benchmark
runs, which is the same as used by CBO.
Add to the GEMINI .sum output file three new statistics, all of which
are related to average-final-earnings replacement rates (see the
background discussion just above). These new statistics have been
added to the end of each row in the .sum output file, so that existing
.sum output statistics are unchanged in their numbering (and, of
course, are unchanged in their value).
The first new GEMINI .sum output
statistic is (48) eh_yrs, which is the number of years annual
covered earnings equals or exceeds STATS.eh_awi_pct of AWI in that
year.
The second new GEMINI .sum output
statistic is (49) afsern, which is the average final
substantial real covered earnings expressed in thousands of dollars
for the year the individual is age 62. Substantial is defined by the
STATS.rr_aie_pct input parameter and the number of final years
included in the average is defined by the STATS.rr_n_years input
parameter. This statistic is the denominator of the replacement
rate.
The third new GEMINI .sum output
statistic is (50) aime62, which is AIME*12 expressed in
thousands of age 62 dollars per year (rather than dollars per month).
Notice that some individuals will a zero value for aime62 because they
did not have an eligibility event at age 62 or they did but were
ineligible for benefits at age 62. This statistic has been included
in the output because it has been used by CBO and the SSAB 2015
Technical Panel to compute a hypothetical social security benefit that
is the numerator of the replacement rate.
Add to the PSG models distribution an AWK script that shows how to
compute CBO-style replacement rates using the new GEMINI .sum output
statistics. The script is named CBO-rr.awk and is located in
the SSASIM\db directory; it computes replacement rates for a subsample
of an RCS-mode cohort sample. Read the short script to understand
what revisions need to be made in it in order to calculate replacement
rates for individuals not born in 2004. The CBO-rr-540.rsf
whose output is tabulated by this script has also been added to the
PSG models distribution.