SSA Benefit Statements: Statements Are Well Received by the Public but
Difficult to Comprehend (Testimony, 09/12/96, GAO/T-HEHS-96-210).
GAO discussed the Social Security Administration's (SSA) Personal
Earnings and Benefit Estimate Statement (PEBES). GAO noted that: (1) the
public has reacted favorably to unsolicited PEBES, and SSA has improved
the statement in response to public feedback; (2) the public generally
feels that the statement is a valuable tool for retirement planning, but
the statement does not clearly convey its purpose and related
information on SSA programs and benefits; (3) PEBES weaknesses have
resulted from its piecemeal development and the lack of testing for
comprehension; (4) there is no consensus on the best model for PEBES;
(5) SSA plans to redesign PEBES only if the redesign results in lower
printing costs; (6) this approach fails to recognize the hidden costs
arising from the need to answer public inquiries about statement
information and the undermining of public confidence in SSA programs by
the statement's poor design; (7) SSA needs to improve PEBES layout and
design and simplify certain explanations, obtain more detailed feedback
from its frontline workers, conduct comprehension tests, and consider
alternative statement formats; and (8) SSA senior management attention
is needed to ensure the success of the statement initiative by
redesigning PEBES to present benefits information more effectively.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-HEHS-96-210
TITLE: SSA Benefit Statements: Statements Are Well Received by the
Public but Difficult to Comprehend
DATE: 09/12/96
SUBJECT: Social security benefits
Forms (documents)
Information dissemination operations
Public relations
Retirement benefits
Customer service
Federal social security programs
IDENTIFIER: SSA Personal Earnings and Benefits Estimate Statement
Canada
Canada Pension Plan
Social Security Program
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Cover
================================================================ COVER
Before the Subcommittee on Social Security, Committee on Ways and
Means, House of Representatives
For Release on Delivery
Expected at 10:30 a.m.,
Thursday, September 12, 1996
SSA BENEFIT STATEMENTS -
STATEMENTS ARE WELL RECEIVED BY
THE PUBLIC BUT DIFFICULT TO
COMPREHEND
Statement of Diana S. Eisenstat, Associate Director, Income Security
Issues
Health, Education, and Human Services Division
GAO/T-HEHS-96-210
GAO/HEHS-96-210T
(105934)
Abbreviations
=============================================================== ABBREV
PEBES - Personal Earnings and Benefit Estimate Statement
SSA - Social Security Administration
SSA BENEFIT STATEMENTS:
STATEMENTS ARE WELL RECEIVED BY
THE PUBLIC BUT DIFFICULT TO
COMPREHEND
============================================================ Chapter 0
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to discuss the Social Security
Administration's (SSA) Personal Earnings and Benefit Estimate
Statement (PEBES). This six-page statement supplies information
about a worker's yearly earnings on record at SSA; eligibility for
Social Security retirement, survivor, and disability benefits; and
estimates of these benefits. The PEBES also explains Social Security
programs and benefits.\1
SSA has provided a PEBES to individuals upon request since 1988. As
required by the Congress, in 1995 SSA began sending the statements
automatically to workers who have reached age 60. Starting in fiscal
year 2000, statements will reach an estimated 123 million people each
year--almost every U.S. worker age 25 and older. SSA projects that
this effort will cost more than $80 million in fiscal year 2000
alone.
Personal experience with a federal agency and its programs can
greatly influence public opinion about that agency. Receiving a
PEBES is likely to be most workers' only experience with SSA until
they retire or possibly become disabled. Both the sponsor of the
legislation requiring these statements and SSA officials hope that
the statements will help build confidence in Social Security programs
by informing the public about Social Security benefits and will serve
as a useful financial planning tool.
In recent testimony before this Subcommittee,\2 we noted that
legislative requirements for the PEBES present a significant workload
challenge for SSA. Today I would like to discuss our ongoing work
for the Subcommittee on how effectively the PEBES conveys information
to the public. Specifically, I will focus on what SSA has done to
improve the statement, the extent to which the PEBES communicates its
goals and information clearly, SSA's plans to revise the statement,
and actions we believe will improve it. To develop this information,
we reviewed SSA's documentation on the PEBES and met with SSA
officials and field office staff. We also reviewed selected public-
and private-sector pension benefit statements and discussed them with
recognized experts in the field. Finally, we consulted an expert in
document design and communication to review and provide comments on
the PEBES.
In summary, we found that SSA has taken steps to improve the PEBES,
and feedback indicates that, overall, the public feels that the
statement can be a valuable tool for retirement planning. The
statement fails to communicate clearly, however, the complex
information readers need to understand SSA's programs and benefits.
The statement, for example, does not explicitly state its purpose.
In addition, the design and organization of the statement make it
difficult for the reader to locate and understand important
information. For example, the information needed to fully understand
the benefit estimates is spread over five pages. Public feedback on
the statement also indicates that readers are confused by several
important explanations, such as who in their family is also eligible
for benefits and how much these family members might receive.
SSA is considering redesigning the PEBES but only if the redesign
results in reduced printing costs. This approach overlooks hidden
costs, such as (1) the workload generated by public inquiries when
people do not understand the statement and (2) the possibility that a
poorly designed statement can undermine, rather than boost, public
confidence. Issuing these statements is a significant initiative for
SSA, and the agency should take steps now to redesign the statement
to more effectively present PEBES information. Active leadership
from SSA's senior managers is needed to ensure the success of this
important initiative.
--------------------
\1 The appendix contains a copy of a 1996 PEBES, which has been
slightly reduced for photocopying purposes.
\2 Social Security Administration: Effective Leadership Needed to
Meet Daunting Challenges (GAO/T-OCG-96-7, July 25, 1996).
OVERVIEW OF THE PEBES
---------------------------------------------------------- Chapter 0:1
Since the Social Security Act became law in 1935, workers have had
the right to review their earnings records on file at SSA to ensure
that they are correct.\3 In 1988, SSA introduced the PEBES to better
enable workers who requested such information to review their
earnings records and obtain benefit estimates. According to SSA,
less than 2 percent of workers who pay Social Security taxes request
these statements each year.
The PEBES legislation\4 requires SSA to begin sending statements to
eligible workers\5 according to the schedule that appears in table 1.
SSA plans to mail some statements even sooner than required. By
fiscal year 2000, SSA plans to have mailed statements automatically
to more than 70 million workers.
Table 1
Schedule for Distributing Benefit
Statements
Volume estimated by
Fiscal year Eligible individuals SSA
---------------------- ---------------------- ----------------------
1995 Age 60 and over 6.7 million\a
1996-1999 Turning age 60 during 1.6 to 1.8 million
the year annually
2000+ Age 25 and older 123 million annually
----------------------------------------------------------------------
\a This is SSA's total of mandated statements actually mailed in
1995.
By providing these statements, SSA's goals are to (1) better inform
the public of benefits available under SSA's programs, (2) assist
workers in planning for their financial future, and (3) better ensure
that Social Security earnings records are complete and accurate.
Correcting earnings records benefits both SSA and the public because
early identification and correction of errors in earnings records can
reduce the time and cost required to correct them years later when an
individual files for retirement benefits.
Issuing the PEBES is a significant initiative for SSA. The projected
cost of more than $80 million in fiscal year 2000 includes $56
million for production costs, such as printing and mailing the
statement, and $24 million for personnel costs. SSA estimates that
608 staff-years will be required to handle the PEBES workload in
fiscal year 2000: SSA staff are needed to prepare the statements,
investigate discrepancies in workers' earnings records, and respond
to public inquiries.
--------------------
\3 Overall, the chance of SSA incorrectly recording a wage is small.
According to SSA's Accountability Report for Fiscal Year 1995, 98.7
percent of reported earnings are posted accurately to an individual's
record. Even this accuracy rate of almost 99 percent, however,
results in over 2 million earnings each year that cannot be linked to
specific individuals' records.
\4 P.L. 101-239 and P.L. 101-508.
\5 SSA must send a PEBES to those who are at least 25 years old, have
a Social Security number, have wages or net earnings from
self-employment, are not receiving title II benefits, and have a
current address obtainable by SSA.
SSA HAS TAKEN STEPS TO ENHANCE
THE PEBES; PUBLIC REACTION HAS
BEEN POSITIVE
---------------------------------------------------------- Chapter 0:2
Since the PEBES was first developed, SSA has conducted several
small-scale and national surveys to assess the general public's
reaction to receiving an unsolicited PEBES. In addition, SSA has
conducted a series of focus groups to elicit the public's and SSA
employees' opinion of the statement and what parts of it they did and
did not understand.
In response to this feedback and suggestions from SSA staff, SSA
revised the statement. For example, early statements routinely
provided retirement benefit estimates for age 65, the earliest age at
which workers could retire and receive their full Social Security
retirement benefit,\6 and for delayed retirement at age 70. When SSA
learned that many people were interested in the effect of early
retirement on their benefits, SSA added an estimate for retirement at
age 62.
Overall public reaction to receiving an unsolicited PEBES has been
consistently favorable. In a nationally representative survey
conducted during a 1994 pilot test, the majority of respondents
indicated they were glad to receive their statements.\7 In addition,
95 percent of the respondents said the information provided was
helpful to their families. Overall, older individuals reacted more
favorably to receiving a PEBES than did younger individuals. In
addition, SSA representatives who answer the toll- free telephone
calls from the public have stated that most callers are pleased that
they received a PEBES and say that the information is useful for
financial planning.
--------------------
\6 Individuals born in 1937 or earlier can retire at age 65 and
receive their full benefit. For individuals born after 1937, the age
at which they can retire and receive their full benefit gradually
increases, up to 67 for those born in 1960 and later.
\7 As of September 6, 1996, the results of SSA's most recent public
opinion survey, conducted in 1995, had not yet been released.
CLEARLY COMMUNICATING SSA
PROGRAM AND BENEFIT INFORMATION
COULD FURTHER ENHANCE THE
PEBES' VALUE
---------------------------------------------------------- Chapter 0:3
Although SSA has taken steps to improve the PEBES, we found that the
current statement still provides too much information, which may
overwhelm the reader, and presents the information in a way that
undermines its usefulness. These weaknesses are attributable, in
part, to the process SSA used to develop the PEBES. Additional
information and expanded explanations have made the statement longer,
but some explanations still confuse readers. Moreover, SSA has not
tested for reader comprehension and has not collected detailed
information from its front-line workers on the public's response to
the PEBES.
Research suggests that, in general, people find forms, notices, and
statements difficult to use and understand. For this reason, many
people may approach a PEBES-like statement with fear, frustration,
insecurity, and hesitation.\8 To overcome this challenge, the design
expert we consulted suggested that such statements have the
following:
-- An obvious purpose: Readers need to know immediately why they
got the statement, what information it contains, and what they
are expected to do with the information.
-- An attractive and functional design and organization: The
statement should look easy to read, the sections should be
clearly labeled, and the organization should be evident at a
glance. When readers need explanations to understand complex
information, the explanations should appear with the
information.
-- Easy-to-understand explanations: Readers need explanations of
complex programs and benefits in the simplest and most
straightforward language possible.
--------------------
\8 Carolyn Boccella Bagin, A Review of Your Personal Earnings and
Benefit Estimate Statement (Rockville, Md.: July 1996), p. 6.
COMMISSIONER'S MESSAGE DOES
NOT EFFECTIVELY CONVEY
PURPOSE
-------------------------------------------------------- Chapter 0:3.1
In the 1996 PEBES, the message from the Commissioner of Social
Security does not clearly explain why SSA is providing the statement.
Although the message does include information on the statement's
contents and the need for individuals to review the earnings recorded
by SSA, its presentation is uninviting, according to the design
expert we consulted. More specifically, the type is too dense; the
lines are too long; white space is lacking; and the key points are
not highlighted. If the PEBES' recipients do not read the
Commissioner's message, they may not understand why reviewing the
statement is important.
The message also attempts to reassure people that the Social Security
program will be there when they need it with the following reference
(from the 1996 PEBES) to the system's solvency:
The Social Security Board of Trustees projects that the system will
continue to have adequate resources to pay benefits in full for more
than 30 years. This means that there is time for the Congress to
make changes needed to safeguard the program's financial future. I
am confident these actions will result in the continuation of the
American public's widespread support for Social Security.
Some participants in SSA focus groups, however, thought the message
suggested that the resources would not necessarily be there after 30
years. For example, one participant in a 1994 focus group reviewing
a similar Commissioner's message said, ". . . [the] first thing I
think about when I read the message is, [Social Security] is not
going to be there for me."
DESIGN AND ORGANIZATION ARE
NOT USER FRIENDLY
-------------------------------------------------------- Chapter 0:3.2
Comments from SSA's public focus groups, SSA employees, and benefit
experts indicate that the statement contains too much information and
is too complex. In a 1994 focus group summary, for example, SSA
reported that younger workers aged 25 to 35 wanted "a much simplified
form--a single page--with estimated benefits and how much in taxes
they paid into the system with the remainder of the information put
in a pamphlet for future reference." Moreover, given the length and
complexity of the current statement, some focus group participants
and benefit experts suggested that SSA add an index or a table of
contents to help readers navigate the statement.
SSA has not used the best layout and design to help the reader
identify the most important points and move easily from one section
to the next. The organization of the statement is not clear at a
glance. Readers cannot immediately grasp what the sections of the
statement are, and in which order they should read them, according to
the design expert with whom we consulted. The statement lacks
effective use of features such as bulleting and highlighting that
would make it more user friendly.
In addition, the PEBES is disorganized: information does not appear
where needed. The statement has a patchwork of explanations
scattered throughout, causing readers to flip repeatedly from one
page to another to find needed information. For example, page two
begins by referring the reader to page four, and page three contains
six references to information on other pages. Furthermore, to
understand how the benefit estimates were developed and any
limitations to these estimates, a PEBES recipient must read
explanations spread over five pages.
The statement's spreading of benefit estimate explanations over
several pages may result in individuals missing important
information. This is especially true for people whose benefits are
affected by special circumstances, which SSA does not take into
consideration in developing PEBES benefit estimates. For example,
the PEBES estimate is overstated for federal workers who are eligible
for both the Civil Service Retirement System and Social Security
benefits. For these workers, the law requires a reduction in their
Social Security retirement or disability benefits according to a
specific formula.\9 In 1996, this reduction may be as much as $219
per month; however, PEBES' benefit estimates do not reflect this
reduction. The benefit estimate appears on page three; the
explanation of the possible reduction does not appear until the
bottom of page five. Without fully reviewing this additional
information, a reader may not realize that the PEBES benefit estimate
could be overstated.
--------------------
\9 This reduction, commonly known as the Windfall Elimination
Provision, was enacted 1983. Its purpose is to remove an unintended
advantage in the way benefits are calculated for workers who qualify
for Social Security benefits but have spent most of their careers
working in jobs that are not covered by Social Security.
EXPLANATIONS ARE NOT ALWAYS
EASY TO UNDERSTAND
-------------------------------------------------------- Chapter 0:3.3
Because PEBES addresses complex programs and issues, explaining these
points in simple, straightforward language is challenging. Although
SSA made changes to improve the explanation of work credits,\10 for
example, many people still do not understand what these credits are,
the relevance of the credits to their benefits, and how they are
accumulated.
The public also frequently asks questions about the PEBES'
explanation of family benefits.\11 Family benefits are difficult to
calculate and explain because the amount depends on several different
factors, such as the age of the spouse and the spouse's eligibility
for benefits on his or her own work record. Informing the public
about family benefits, however, is especially important: a 1995 SSA
survey revealed that as much as 40 percent of the public is not aware
of these benefits.
--------------------
\10 These credits are earned by working for employers that pay taxes
to the Social Security system. The minimum number of credits needed
varies, depending on the type of benefit and the age of the worker.
\11 SSA uses the term "family benefits" to discuss benefits paid to a
worker's spouse or young children when the worker is retired or
disabled.
WEAKNESSES OF THE PEBES ARE
LINKED TO SSA'S APPROACH
-------------------------------------------------------- Chapter 0:3.4
A team of representatives from a cross section of SSA offices
governed SSA's decisions on the PEBES' development, testing, and
implementation. The team revised and expanded the statement in
response to feedback on individual problems. The design expert we
consulted observed that the current statement "appears to have been
the result of too many authors, without a designated person to review
the entire piece from the eyes of the readers. It seems to have
developed over time, piecemeal . . . ."\12
Although SSA officials got the public's feedback, they missed some
key opportunities along the way to improve the statement. While SSA
conducted tests to ensure that the PEBES could be read at a seventh
grade level, it has not conducted formal comprehension tests.\13 For
example, SSA could have administered either verbal or written tests
to a sample of readers to determine whether they actually understood
SSA's explanations of certain complex issues. These tests would have
provided SSA with quantifiable, objective information to use in
revising the statement. SSA has also failed to take advantage of
information from its front-line workers who answer the public's
questions about the PEBES every day. SSA currently has front-line
workers record the reason why people call; however, the information
collected does not provide sufficient detail for SSA to understand
the problems people are having with the PEBES.
--------------------
\12 Bagin, p. 18.
\13 In a 1988 telephone survey during the PEBES early development,
SSA asked a few questions to check for reader comprehension. The
statement has changed significantly since that time, however.
NO CONSENSUS ON THE BEST
MODEL FOR THE STATEMENT
-------------------------------------------------------- Chapter 0:3.5
Although the public and benefit experts agree that the current
statement contains too much information, neither a standard benefit
statement model exists in the public or private sector nor does a
clear consensus on how best to present benefit information. The
Canadian government chose to use a two-part document when it began
sending out unsolicited benefit statements in 1985. The Canada
Pension Plan's one-page statement provides specific individual
information, including the earnings record and benefit estimates. A
separate brochure details the program explanations. The first time
the Plan mails the statement, it sends both the one-page individual
information and the detailed brochure; subsequent mailings contain
only the single page with the individual information.
Although some focus group participants and benefit experts prefer a
two-part format, others believe that all information should remain in
a single document, fearing that statement recipients will lose or
might not read the separate explanations. SSA has twice tested the
public's reaction to receiving two separate documents. On the basis
of a 1987 focus group test, SSA concluded that it needed to either
redesign the explanatory brochure or incorporate the information into
one document. SSA chose the latter approach. In a 1994 test, people
indicated that they preferred receiving one document; however, the
single document SSA used in the test had less information and a more
readable format than the current PEBES.
REDESIGN PLANS DO NOT FULLY
CONSIDER COSTS
---------------------------------------------------------- Chapter 0:4
SSA, through the Government Printing Office, has awarded a 2-year
contract for printing the fiscal years 1997 and 1998 statements.
These statements will have the same format as the current PEBES with
only a few wording changes. SSA is planning a more extensive
redesign of the PEBES for the fiscal year 1999 mailings but only if
it will save money on printing costs.
By focusing on reduced printing costs as the main reason for
redesigning the PEBES, SSA is overlooking the hidden costs of the
statement's existing weaknesses. For example, if people do not
understand why they got the statement or have questions about
information provided in the statement, they may call or visit SSA,
creating more work for SSA staff. Furthermore, if the PEBES
frustrates or confuses people, it could undermine public confidence
in SSA and its programs.
Our work suggests, and experts agree, that the PEBES' value could be
enhanced by several changes. Yet SSA's redesign team is focusing on
reducing printing costs without considering all of the factors that
would ensure that PEBES is a cost-effective document.
OBSERVATIONS ON NEEDED PEBES
IMPROVEMENTS
---------------------------------------------------------- Chapter 0:5
The PEBES initiative is an important step in better informing the
public about SSA's programs and benefits. To improve the statement,
SSA can quickly make some basic changes. For example, SSA officials
told us that, on the basis of our findings, they have revised the
Commissioner's message for the 1997 PEBES to make it shorter and less
complex. More extensive revisions are needed, however, to ensure
that the statement communicates effectively. SSA will need to start
now to complete these changes before its 1999 redesign target date.
The changes include improving the layout and design and simplifying
certain explanations. These revisions will require time to collect
data and to develop and test alternatives. SSA can help ensure that
the changes target the most significant weaknesses by systematically
obtaining more detailed feedback from front-line workers. SSA could
also ensure that the changes clarify the statement by conducting
formal comprehension tests with a sample of future PEBES recipients.
In addition, we believe SSA should evaluate alternative formats for
communicating the information presented in PEBES. For example, SSA
could present the Commissioner's message in a separate cover letter
accompanying the statement, or SSA could consider a two-part option,
similar to the approach of the Canada Pension Plan. To select the
most cost-effective option, SSA needs to collect and assess
additional cost information on options available and test different
PEBES formats.
Our work suggests that improving PEBES will demand attention from
SSA's senior leadership. For example, how best to balance the
public's need for information with the problems resulting from
providing too much information are too difficult and complex to
resolve without senior-level SSA involvement.
-------------------------------------------------------- Chapter 0:5.1
Mr. Chairman, this concludes my formal remarks. I would be happy to
answer any questions from you and other members of the Subcommittee.
Thank you.
CONTRIBUTORS
---------------------------------------------------------- Chapter 0:6
For more information on this testimony, please call Diana S.
Eisenstat, Associate Director, Income Security Issues, at (202)
512-5562 or Cynthia M. Fagnoni, Assistant Director, at (202)
512-7202. Other major contributors include Evaluators Kay Brown,
Nora Perry, and Elizabeth Jones.
(See figure in printed edition.)Appendix
YOUR PERSONAL EARNINGS AND BENEFIT
ESTIMATE STATEMENT
============================================================ Chapter 0
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
*** End of document. ***