SSA Benefit Statements

The Social Security Administration (SSA) in 1995 began sending statements--called Personal Earnings and Benefit Estimate Statements--automatically to workers who had reached age 60. By fiscal year 2000, these statements will reach an estimated 123 million people annually--almost every U.S. worker aged 25 and older. These six-page statements provide workers with information on their yearly earnings on record at SSA, information on their eligibility for social security retirement and other benefits, and estimates of these benefits. Experts agree that SSA's approach is generally reasonable, and feedback suggests that the public generally finds the statements to be helpful in retirement planning. However, GAO believes that the statements could benefit from extensive revisions. Specifically, the statements need a better layout and design and simpler explanations. SSA will need to start now to complete these changes by its 1999 redesign target date because the agency will require time to collect data and test alternatives.

GAO found that: (1) the methods and assumptions used by SSA for estimating future retirement benefits are consistent with those used by private and public pension plan sponsors; (2) the public feels that the PEBES can be a valuable tool for retirement planning; (3) although SSA has taken steps to improve PEBES, it fails to communicate clearly the complex information readers need to understand SSA programs and benefits, partly because the design and organization of the statement make it difficult for the reader to locate and understand important information; (4) readers are confused by several important explanations, such as who in their family is eligible for benefits; (5) SSA is considering redesigning PEBES, but only if the redesign results in reduced printing costs; (6) this approach overlooks hidden costs, such as the workload generated by public inquiries when people do not understand the statement, and the possibility that a poorly designed statement will undermine, rather than improve, public confidence; and (7) active leadership from SSA senior managers will be needed to ensure the success of this important initiative.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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