Policy Simulation Group

Pension Projection Models

SSASIM

This is a brief description of just one of the PSG models, a unit of three that work seamlessly together as described on the homepage.

SSASIM is a social security policy simulation model that has been under continuous development since 1994, when started as part of Advisory Council's work.

SSASIM development has been funded by many organizations, including SSA, GAO, EBRI, AARP, IMF, Concord Coalition, and Policy Simulation Group.

SSASIM is two models in one: a macro model of aggregate program finances and an embedded micro model of cohort individuals that can represent a wide range of policy reforms including individual accounts.

Model changes in assumptions and policy are accomplished by altering values of parameters in a thoroughly documented input database using a simple run specification language — there is no need to reprogram model's logic or to work directly with the input database.

The macro model operates in cell-based actuarial (CBA) mode by default, or in overlapping cohorts (OLC) mode with the optional PENSIM and GEMINI add-ons. Both modes represent systemic risks affecting social security finances using stochastic (Monte Carlo) simulation of key demographic and economic assumptions plus equity returns. Macro model produces output like in Trustees Reports. A four-page introduction OASDI Solvency Estimation using the PSG Models was prepared at the request of the Social Security Advisory Board.

The micro model operates in exemplary cohort individuals (ECI) mode by default, or in representative cohort sample (RCS) mode with the optional PENSIM and GEMINI add-ons. Both modes use logic similar to other microsimulation models of birth cohorts. Both modes project all systemic risks simulated by macro model onto individuals, and RCS mode also represents idiosyncratic risks facing individuals regarding mortality, disability, labor force participation, earnings fluctuations, marriage, divorce, and childbirth. Both modes produce a wide array of benefit adequacy and contribution return (i.e., money's worth) statistics for individuals and couples. A four-page introduction OASDI Distributional Estimation using the PSG Models was prepared at the request of the Social Security Advisory Board.

Research on alternative stochastic simulation methods, which was commissioned by SSA, is reported in Methods for Stochastic Trust Fund Projection (January 2003).