The Federal Disability Insurance (DI) Trust Fund doesn’t really have a long-term outlook.
The trustees of the DI Trust Fund observe in their annual report on the status of the fund that, “The DI Trust Fund does not satisfy the short-range test of financial adequacy.”
The fund ended 2011 with just $154 billion in assets, down 15% from the asset total it had a year earlier.
The DI Trust Fund is supposed to fund itself with a 1.51% tax on payroll subject to payroll taxes. The DI payroll tax rate is 0.61% for employees and 0.91% for employers.
The trust fund’s revenue has fallen every year since 2007 and totaled just $106 billion in 2011, down 5.8% from the 2010 total and down 19% from the 2007 total.
One reason revenue is down is that the fund invests its assets in government obligations, and interest rates on government bonds are at or near record lows. The effective annual interest rate the DI Trust Fund earns fell to 4.8% in 2011, from 4.9% in 2010.
Thanks to the flow of payroll tax revenue, the DI program should have enough cash to make benefits payments over the next 10 years if intermediate assumptions about economic conditions and other conditions hold up, the trustees say.