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different parties. In that way, the board would always have two members who were of the President's party.

Senator MOYNIHAN. Would you have the goodness to put that— just write that down for us and send it along to the committee? Mr. MYERS. It is in my statement, Mr. Chairman.

Now, as to the proposal to provide earnings and benefit estimates on an automatic basis, I think that this is very desirable. This was recommended by the National Commission on Social Security in 1981. It is necessary and desirable to phase it in, as you have done, because it is a big job. I think that the Social Security Administration is to be congratulated on what they have already done on a voluntary basis.

Senator MOYNIHAN. Yes.

Mr. MYERS. There is, however, one serious flaw in the present procedure, and I would hope the bill would do something to prevent this. In computing the projected benefits the SSA assumes that earnings rise in the future, with real earnings rising at 1 percent per year. So, the benefits that are shown are rather high in terms of real dollars, until one realizes that the earnings on which they are based are also higher. I think that the statement should have shown for the projected retirement benefits also what the final earnings of the individual were assumed to be. The important thing, as you well know, as to Social Security benefits is not their absolute dollar amount, but rather what their dollar amount is relative to final earnings. So, I would like to see a provision in the bill that not only should retirement benefits be projected, but also the final earnings on which those retirement benefits were based should be shown.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Myers appears in the appendix.] Senator MOYNIHAN. And have someone make a realistic judgment about, "is that going to happen to me?"

We have not had a 1 percent real growth in earnings for the last 15 years. In 1987 real family income just got back to the 1973 level, as you know.

Mr. MYERS. However, in the assumptions underlying the benefit projections, just as in the actuarial cost estimates for the program, it is assumed that earnings rise more than prices. That assumption has been built into the projection, which I think is desirable, but people should realize that in the benefit estimates which they are getting, particularly younger people, with retirement 30 or 40 years off, their real earnings are also assumed to be higher. They should therefore be able to compare the benefits with their final earnings and realize their relative financial position. Otherwise, some people may think that they will get so much from Social Security that they do not need to do anything else for themselves.

Senator MoYNIHAN. Ah.

Well, shall we ask Mr. Walsh how they deal with that question in our neighbors to the north?

And again, welcome, sir. I was so pleased to hear Mr. Myers say that this is reciprocity here. It is very generous of you and Mr. Belanger and Ms. Beauregard to come down, and this is an important occasion for us.

STATEMENT OF DONALD F. WALSH, DIRECTOR, RECORD OF EARNINGS AND CONTRIBUTOR INFORMATION SERVICES, CANADA PENSION PLAN, INCOME SECURITY PROGRAMS BRANCH, DEPARTMENT OF NATIONAL HEALTH AND WELFARE, OTTAWA, ONTARIO, CANADA

Mr. WALSH. Thank you very much, Mr. Chairman.

We are very pleased to be here this morning and welcome this opportunity to share with you our experiences with our Contributor Information program. I prepared a brief overview of our program and would like to quote from this booklet.

Senator MOYNIHAN. It will be placed in the record, and we also have-you provided us a Contributor Information Program briefing book, which is your sort of manual, your office manual, and I would like to have that placed in the record also. It is a very useful sort of explanation of how you go through things.

[The information appears in the appendix.]

Mr. WALSH. Thank you, Mr. Chairman.

As you are aware, Mr. Chairman, the Canada Pension Plan is a compulsory program not unlike the Social Security scheme here in the United States. Eligibility to receive benefits and the amounts of benefits payable are determined by the total earnings and contributions credited to an individual throughout his or her working lifetime.

A survey conducted in 1982 revealed that less than one-half of 1 percent of all contributors to the Canada Pension Plan had applied for a statement showing the credits they had accumulated. It was evident to our administration that the public at large were not aware of the significance of their contributions and the relationship they bore to the pensions that could be payable.

The Canada Pension Plan Administration recognized a need to better inform the public and in 1983 conducted a pilot project to assess their reaction to an information package which included a statement of their credits paid to date, pension calculation estimates, and descriptions of the various pensions payable. From that survey, more than 91 percent of the recipients indicated that they intended to retain the documents for future reference. As well, more than 75 percent of those surveyed stated that the documents were very informative and helpful.

In view of this very positive response to the pilot project, the Canada Pension Plan Administration implemented a contributor information program in 1985. The primary purpose of this program was to encourage the public's involvement with the Canada Pension Plan. Its objectives were to provide advice and information to all contributors regarding the Canada Pension Plan, to promote an understanding and awareness of the significance of their contributions as they relate to potential benefits, to make contributors aware of the importance of ensuring that the earnings and contributions records were accurate and complete, and also to ensure that the benefits that they had accrued were applied for.

I should add also, Mr. Chairman, that the pension entitlement estimates that are shown on our contributor statements are calculated using actual figures only and reflect a pension value that would be payable as of the date that the statement is issued. The

Canada Pension Plan Administration has refrained from attempting to project earnings and pension estimates over a lifetime due to the many variables involved, and more importantly, did not want to mislead the individual into a false sense of security that may not materialize if changes occurred in the employment patterns for the remainder of his lifetime.

The Canada Pension Plan Contributor Information Program has now just completed its fifth year of operation in March of 1989. In total we have sent more than 17 million statements to contributors between the ages of 20 and 92. Most of the contributory population have now received these statements at least twice. Our program is designed to send a new statement once every 3 to 4 years. A contributor, however, still retains the right under our legislation to request a statement of his credits once in any 12-month period.

Of the 17 million statements that we have mailed to date, only slightly more than 700,000 were returned as undeliverable due to either an incomplete address or the death of the contributor. This program has been directly responsible for more than 200,000 inquiries regarding pension entitlement or requesting an investigation of missing or incomplete earnings and contributions information.

The total known costs of our program from 1981 to 1989 was in excess of $8 million. The last fiscal year, 1988/89, we had delivered more than 4 million statements to our contributory population. The total cost per statement was approximately 56 cents of which 31 cents was postage alone.

Senator MOYNIHAN. That famous stamp. The stamp costs more, costs the most.

Mr. WALSH. Yes.

Although the Canada Pension Plan Administration has not conducted a formal survey during the past 5 years, it is reasonable to conclude that the Contributor Information Program has been well received by the general public. It is generally agreed that the Contributor Information Program has achieved all of its stated objectives, and at the present time the Department of National Health and Welfare has no intentions of ceasing this program.

[The prepared statement of Mr. Walsh appears in the appendix.] Senator MOYNIHAN. Thank you, Mr. Walsh, and I would like to say for the record here that you have been thoughtful enough to prepare a sample Canadian contributor statement, and it really is remarkably clear and readable and it tells you about your retirement pension, your disability pension, your disabled contributor's child's pension, death benefit, survivor's pension, orphan benefit.

If I could just say, when I did finally get my statement from Social Security, it was interesting to me that the thing I really focused on was survivor's benefits. Now I knew I had survivor's benefits for heaven's sake, but I knew and I did not know. It is probably one of the things least appreciated by contributors-you do not know you have survivor's benefits until you get killed. Wouldn't you say, Bob, that this is not really part of the awareness of the working-age American that, you know, the family is protected?

And I must say I admire this little statement that goes out. It says, "Canada Pension Plan Terms and Conditions," and it would leave you to feel that, you know, you are part of an insurance

system, and these are the terms and conditions of your contract. It says, "Important: This document should be kept with your valuable papers," and that gives you a nice sense that, yes, we know you are here. You have some rights here.

Have you two seen these?

Mr. MYERS. Yes.

Senator MOYNIHAN. Canadians do things well.
Mr. Myers, sir.

Mr. MYERS. Mr. Chairman, if I might say something?
Senator MOYNIHAN. Please.

Mr. MYERS. I quite agree with you. What Canada is doing is really excellent in this way, but I do want to comment on the point that they do not make projection of earnings. I think that for their system this is right, but for ours it would be wrong. The reason is the systems are quite different. The Canada Pension Plan, the contributory plan, is just part of the picture. They also have a flat benefit that-

Senator MOYNIHAN. That is right, yes.

Mr. MYERS [continuing]. They get. Whereas ours, the two are merged and you just cannot separate them. So with our system, in order to get a meaningful picture of the retirement benefits, you must have some sort of a projection.

Whereas, of course, the survivor and disability benefits, as in our statements, as also in the Canada Pension Plan statements, it says, "If you die today or if you are disabled today, this is what you will get." We can determine benefit amounts that way, but under OASDI you cannot say what retirement benefit a person has earned to date, whereas in the Canada Pension Plan you can clearly do that.

Senator MOYNIHAN. Yes, I think that is fair, but you would also agree that there is a nice sense of a fiduciary relationship that you get out of these things.

Mr. MYERS. Yes, it is an excellent statement.

Senator MOYNIHAN. Yes.

Well, we would like to thank you all-Mr. Walsh, did you want to say something?

Mr. WALSH. I would just like to add in closing, Mr. Chairman, that my department would be very willing to cooperate with the SSA during their project stage, or the project development stage, and share the pains that we went through in developing our program and offer them any assistance that they may like to have. So we would be most cooperative in that regard.

Senator MOYNIHAN. That is very generous and we thank you for that. We hope you will thank your Minister for making it possible for you to come down, and again, we are most privileged to have the three of you here.

Once again, I want to thank Mr. Ball, Mr. Myers. You views carry very great weight with this committee and they ought to. Gentlemen.

Mr. MYERS. Thank you.

Mr. BALL. Thank you, Mr. Chairman.

Senator MOYNIHAN. Well, our next panel, and a very distinguished, if younger, group, or pair rather, of public officials, Mr. Royal Shipp, who is the Deputy Associate Director for Research Co

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ordination at the Congressional Research Service, and Mr. Joseph Delfico, well and favorably known to this group as the Director of Income Security of the Human Resources Division at the General Accounting Office.

I should make clear that, Mr. Shipp, you were executive director of the congressional panel on Social Security organization, which was headed by Elmer Staats, and one of the panel members was my old colleague and dear friend, Martha Derthick, and again, we will proceed as we have. We will put both of these statements in the record as if read, and you can summarize them exactly as you wish. Take your time. We are here to hear from you, and we want this record to be as full as it should be.

Mr. Shipp.

We just follow the sort of random--
Mr. SHIPP. Yes.

Senator MOYNIHAN [continuing]. Computer printout of who comes first, and you are first in this case.

STATEMENT OF P. ROYAL SHIPP, DEPUTY ASSOCIATE DIRECTOR FOR RESEARCH COORDINATION, CONGRESSIONAL RESEARCH SERVICE, WASHINGTON, DC

Mr. SHIPP. Thank you, Mr. Chairman, I am pleased to appear before your committee to discuss the conclusions and the recommendations of the congressional panel on Social Security organization, which I was the executive director.

This study panel was authorized by the Social Security Amendments of 1983. Public Law 98-21 specified establishment of a threemember panel to study how an independent agency might be implemented if the Congress decided to enact one, including the possibility of a three-member board. The panel took this direction rather literally and throughout its report specified that it was not dealing with the question of whether an independent agency was a good idea

Senator MOYNIHAN. Yes.

Mr. SHIPP. But if the Congress enacted one, how it should be organized.

You have noted, Mr. Chairman, that Elmer Staats was the panel's chairman. Martha Derthick was one panel member, and Arthur Hess, with a long-time career working in the Social Security Administration, was the other. These panel members were selected jointly by the chairman of the Finance Committee and the Committee on Ways and Means.

The panel's report was issued 5 years ago. There is no way to know, of course, whether that panel, or a different panel, would have reached exactly the same conclusions if they were studying the question today.

The panel began its work in November of 1983 and issued its report in June of 1984. Copies of the report are available. It is a short report as these things go. An analytical staff prepared background information and planned public hearings, by did little research. The panel members themselves constituted

Senator MOYNIHAN. Well, they were able to think about this subject on their own.

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