Does the Social Security Fund Earn Interest?

/ / Does the Social Security Fund Earn Interest?

We were talkin this morning about stuff. General office chat for a Monday morning, and the topic of the presidential election in 08 came up. Other things came up and one totally unrelated question to the election came up. Does the money in the Social Security fund, or pool or whatever you wanna call it earn interest?

The short answer, to my relief is yes. Here's the official answer from the SSA website:

A: Yes they do. By law, the assets of the Social Security program must be invested in securities guaranteed as to both principal and interest. The Trust Funds hold a mix of short-term and long-term government bonds. The Trust Funds can hold both regular Treasury securities and "special obligation" securities issued only to federal trust funds. In practice, most of the securities in the Social Security Trust Funds are of the "special obligation" type. (See additional explanation from SSA's Office of the Actuary.)

The Trust Funds earn interest which is set at the average market yield on long-term Treasury securities. Interest earnings on the invested assets of the combined OASI and DI Trust Funds were $55.5 billion in calendar year 1999. This represented an effective annual interest rate of 6.9 percent.

The Trust Funds have earned interest in every year since the program began. More detailed information on the Trust Fund investments can be found in the Annual Report of the Social Security Trustees and on the Actuary's webpages concerning the Investment Transactions and Investment Holdings of the Trust Funds.

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