subject: 2011 Changes In Social Security And Other Payments [print this page] In 2011, changes in Social Security and other payments will occur to streamline the payment processes involved and save the program about $1 billion through the course of a decade. For the largest retirement savings program in the country, this may help generate a financial boost to help address the looming deficit, and decrease the impact of the deficit on the expected benefits of future retirees. Aside from Social Security, Veterans Affairs, Supplemental Security Income, and Railroad Retirement payments will be given to new beneficiaries through direct bank account deposits, or a debit card for those who do not have bank accounts. Current recipients are required to enroll for any of these payment methods before the start of April 2011.
Walt Henderson of the Department of Treasury says that the $1 billion savings is augmented by the estimated yearly savings of $120 million, as they no longer need to produce actual checks and send them to recipients via snail mail. In addition to the said savings, the cases of outright theft and fraud are set to decrease. Henderson, Electronic Funds Transfer strategy director, also states that older Social Security beneficiaries should not worry about these changes inconveniencing them. He reports that approximately 75% of all beneficiaries aged above 80 years old have the direct deposit system in place, and that they can make exceptions and mail checks if seniors find the new payment process unwieldy.
The benefits of the new payment system for workers include the lack of any charges for direct deposits and fees per single withdrawal through ATM for every check for debit card users. In addition, beneficiaries who use debit cards would not have to pay any charges for debit purchases and cash withdrawals at the same time. The disadvantages, however, may seem to be more complex: retirees may fall into the traps set by crooked payday lenders. Although payday loans are not a part of most retirement plans, the high interest rates these lenders implement can make retirees who depend mainly on Social Security paychecks vulnerable if they suddenly need loans.
The NCLC
The National Consumer Law Center, also called the NCLC, pushes for reform and regulations on the interaction between payday lenders and these seniors who mainly bank on Social Security for retirement income. The NCLC wishes to protect these individuals by forcing financial institutions to examine the liquidity of a borrower (and his or her ability to pay the loan through Social Security benefits), implement ceilings on percentage rates and other fees, and allow borrowers to repay their loans with the installment method. Presumably, the end goal is that the 2011 changes in Social Security and other payments will give retirees more stable funds, rather than an insecure retirement due to fraud, theft, and other causes related to the change in payment method.
