Policy Simulation Group

Pension Projection Models

Enhancements Introduced in Current 9/1/10 Version of the PSG Models

1. Add to the OLC mode of operation an improved method of estimating GDP in SSASIM from the employment and earnings estimates generated by PENSIM. For more details, read the documentation of the new SSASIM input parameter, ESTAB.olc_lab_sf, that controls the extent of the new earnings adjustment of GDP labor input.
2. Refine PENSIM retirement timing logic in situations where the individual's OAI early retirement age (ERA) is greater than 62 and the individual's age is greater than or equal to the individual's normal retirement age (NRA). This change maintains the spike in retirement at the NRA, which was not maintained in the old logic. Both the new and old logic maintain the larger spike in retirement at the higher ERA. This change has no effect on PSG model results under current-law OASDI policy (which sets ERA to 62), but does cause relatively minor changes in results produced by runs that specify reforms that raise the ERA.
3. Revise PENSIM so that the last retirement age can be as high as 73 rather than 70 in prior versions of the PSG models. This change causes a different stream of random numbers to be used for some individual behavior in PENSIM, which means that the individual-by-individual results generated by old OLC, ESP, and RCS runs will be different when using this version of the PSG models, but aggregate statistics tabulated for reasonably large samples of individuals should not differ by a statistically significant amount. This change has been made to facilitate analysis of OASDI reforms that raise the the early, normal, or last retirement ages. Be sure to read the new documentation of the SSASIM policy parameters OAIBEN.era, OAIBEN.nra, and OAIBEN.lra, for details on this enhancement.
4. Add to RSF Toolkit Help menu a new item that checks whether the version of the PSG models you are using is up-to-date or whether there is a newer version. This check involves a simple Internet query, and therefore, the speed of the check depends on the quality of your Internet connection.
5. Allow the @ symbol (for which the new run id is substituted) to be included in an embedded SQL statement in a run specification file. Revise the Getting Started with the RSF Toolkit documentation to reflect this enhancement.
6. Upgrade SQLite database source code and utility programs from the 3.6.22 to the 3.7.2 version. This change should have no effect on the operation of the PSG models.
7. Add to the PSG model input databases five new runs that use intermediate-cost assumptions from the 2010 Trustees Report: run 10 operating in CBA mode, run 30 operating in OLC mode, run 50 operating in ESP mode, run 70 operating in RCS mode, and run 90 operating in ESP+ mode. In addition to the new Trustees Report assumptions, all five of these x0 runs incorporate more recent historical information so that the last known historical information is for 2008 (instead of 2004 as before). The RSF Toolkit has been changed so that the benchmark runs are these new x0 runs and so that the build of new run specifications uses these new x0 runs as baseline runs. If for some reason you want to continue building new rsf using the old unchanged x9 runs as the baselines, then change toolkit preferences on the Help menu of the RSF Toolkit. To convert old rsf to use the new x0 runs as the baseline runs, simply change the x? to x0 in each create model run same as run x? except: statement.
8. Re-estimate the inflation-asset-returns VAR(2) model, which is described in the revised Section 1.2.5 of the SSASIM Guide, using four additional years of data through 2009. This new version of the VAR(2) model is used to specify stochastic inflation and asset returns in the asset-returns-10.rsf run specification file, which is included in the PSG model distribution.
9. Specify both CBA-mode and OLC-mode stochastic runs based on 2010 Trustees Report assumptions and the new inflation-asset-returns VAR(2) model. The specifications for these two new runs are in the stoch10cba.rsf and stoch10olc.rsf files, respectively, which also include a summary of the simulated variability in OASDI actuarial balance and cost rate and how these simulated results compare with stochastic results in the current and past Trustees Reports. The stoch10spec.tcl program to generate the assumption variable means and standard deviations, and the stoch10.awk program to tabulate the raw stochastic results, are also included in the upgrade package.