p owe r-of -attorney payment method; however, since SSA does not puhlicize the 

 method, it is doubtful if more than a very small percentage of social secu- 

 rity beneficiaries are aware that the option is available to them. 



On August 7, 1972, Public Law 92-366 was approved. This statute is Treasury- 

 supported legislation which authorized the application of what is termed the 

 direct-deposit procedure to all kinds of recurring Federal payments such as 

 social security, veterans', and civil service retirement benefits, all at the 

 option of the administrative agency. Under this procedure, when a recipient 

 requests to be paid at a financial organization, his individual check is 

 drawn payable to the financial organization for credit to his account therein, 

 rather than in his name. This procedure, which has been applicable to Federal 

 salary payments for a number of years, has these several significant advan- 

 tages over the power-of-attomey method: (1) it eliminates the need for 

 execution of a power-of-attomey and its renewal each 12 months; (2) it 

 brings the payments under the purview of comprehensive Treasury regulations 

 (Department Circular No. 1076, Second Revision - Fxhibit 3) and the safeguards 

 contained therein with respect to financial organizations acting as agents 

 of the recipients (section 209.9) and acquittance to the United States (sec- 

 tion 209.10), and (3) it causes all Individual checks remitted to the same 

 financial organization to be drawn in favor of a common payee (the financial 

 organization). This latter advantage provides the Government the option, 

 in the future, to supplant all individual checks to a financial organization 

 with payments under an electronics funds transfer system. The Treasury 

 holds the view that for these reasons, and considering the advantages set 

 out in Figure 1.1, the direct-deposit payment method is the preferred method 

 for paying recipients of all kinds of recurring Federal payments. In this 

 report, when the term "direct deposit" is used to describe a beneficiary or 

 a method of payment, it refers to this method of receiving payment at a finan- 

 cial organization. 



Under the current system of issuing 26 million social security checks for 

 delivery on a single payment date it is necessary to print and physically 

 store checks throughout the month preceding the payment date. The Treasury 

 maintains all payment records on magnetic tape. SSA furnishes record up- 

 dating transactions on tape each month in accordance with established sched- 

 ules. This update material is received by Treasury disbursing centers com- 

 mencing about the 3rd and ending about the 22nd of the month. This schedule 

 allows the Postal Service several days at month-end to assure delivery of 

 the checks on the delivery date. 



Each month, after the checks have been printed and while they are being held 

 in storage, events occur which require retrieval of checks. In the month of 

 May, 1973, Treasury disbursing center personnel manually searched for, re- 

 trieved, and took the necessary action on 276 thousand social security checks. 

 A change of beneficiary address was responsible for 91 thousand of these re- 

 trieval actions. The remaining checks were held mostly due to death. of payee. 

 Other events, such as non-receipt, loss or destruction after receipt, and 

 theft and forgery contribute to an ever-increasing disbursing workload. Most 

 of this workload would be significantly reduced under a direct-deposit system. 

 The frequency of loss or destruction after receipt and theft and forgery would 



-4- 



