Social Security for the 21st Century Act

Summary: Directs the Secretary of the Treasury to transfer from the Federal Old-Age and Survivors Insurance Trust fund for crediting by the Commissioner to an elector's RSA of a retirement security account contribution based on an applicable percentage of the elector's FICA (Federal Insurance Contributions Act) or self-employment taxes for investment according to the elector's designated investment options under a system similar to the Thrift Savings Plan for Federal employees, with a Retirement Security Fund (RSF) established in the Treasury that is to be managed by a Retirement Security Fund Investment Board (RSFIB). Provides for the treatment of RSA distributions and the off-budget budgetary treatment of RSF and its RSAs.
Requires RSFIB to study and report to the President and the Congress on increased investment options for electors.
Amends SSA title II to establish in the Treasury the Protect Social Security Account to save budget surpluses until a reform measure is enacted to ensure the long-term solvency of the social security trust funds. Requires the Secretary to: (1) pay into the Account at the end of each fiscal year in the FY 2000 through 2010 period an amount which in the aggregate, at the end of such period, will equal 70 percent of any such surplus projected by the Secretary for that period; and (2) invest all such amounts in  public debt obligations.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Social Security for the 21st Century 
Act''.

SEC. 2. RETIREMENT SECURITY ACCOUNTS.

    (a) Establishment and Maintenance of Retirement Security 
Accounts.--Title II of the Social Security Act (42 U.S.C. 401 et seq.) 
is amended--
            (1) by inserting before section 201 the following:

                    ``Part A--Insurance Benefits'';

        and
            (2) by adding at the end the following:

                 ``Part B--Retirement Security Accounts

                             ``definitions

    ``Sec. 251. In this part--
            ``(1) Commissioner.--The term `Commissioner' means the 
        Commissioner of Social Security.
            ``(2) Electing individual.--The term `electing individual' 
        means an individual with respect to whom an election under 
        section 252 is in effect.
            ``(3) Eligible individual.--The term `eligible individual' 
        means an individual--
                    ``(A) who is 18 years of age or older; and
                    ``(B) who is receiving wages subject to tax under 
                section 3101(a) of the Internal Revenue Code of 1986 or 
                self-employment income subject to tax under section 
                1401(a) of such Code.
            ``(4) Retirement security account.--The term `retirement 
        security account' means any retirement security account in the 
        Retirement Security Fund (established under section 255(a)) 
        which is administered by the Retirement Security Fund 
        Investment Board (established under section 255(b)).
            ``(5) Retirement security account contribution.--The term 
        `retirement security account contribution' has the meaning 
        given such term by section 252(e)(2)(A).

      ``election and establishment of retirement security accounts

    ``Sec. 252. (a) Election.--An eligible individual may elect to make 
retirement security account contributions to a retirement security 
account established under subsection (d) and maintained for the benefit 
of such individual.
    ``(b) Election Period.--An election under subsection (a) shall be 
irrevocable and shall be effective with respect to wages paid or self-
employment income earned during any quarter of coverage beginning after 
the date of such election.
    ``(c) Form of Election.--An election under this section shall be 
made--
            ``(1) on W-4 forms (or any successor form), or
            ``(2) in such other manner as the Commissioner may 
        prescribe in order to ensure ease of administration and 
        reductions in burdens on employers.
    ``(d) Establishment.--The Commissioner, within 30 days of the 
receipt of the first contribution received pursuant to subsection (e) 
with respect to any electing individual, shall establish in the name of 
such individual a retirement security account. The retirement security 
account shall be identified to the account holder by means of the 
account holder's social security account number.
    ``(e) Contributions.--
            ``(1) In general.--The Secretary of the Treasury shall 
        transfer from the Federal Old-Age and Survivors Insurance Trust 
        Fund, for crediting by the Commissioner to a retirement 
        security account of an electing individual, a retirement 
        security account contribution of such individual.
            ``(2) Retirement security account contribution.--
                    ``(A) In general.--For purposes of this part, the 
                term `retirement security account contribution' means, 
                with respect to any quarter of coverage during an 
                election period under subsection (b), an amount equal 
                to the applicable percentage of the amount collected 
                under section 3101(a) or 1401(a) of the Internal 
                Revenue Code of 1986 on account of wages or self-
                employment income of an electing individual for such 
                quarter.
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage for any 
                quarter of coverage during an election period under 
                subsection (b) shall be equal to--
                            ``(i) in the case of amounts collected 
                        under section 3101(a) of the Internal Revenue 
                        Code of 1986, 2.5 percent for the first 4 
                        quarters, increased (but not above 50 percent) 
                        by 2.5 percentage points for each successive 4 
                        quarters, and
                            ``(ii) in the case of amounts collected 
                        under section 1401(a) of such Code, 1.25 
                        percent for the first 4 quarters, increased 
                        (but not above 25 percent) by 1.25 percentage 
                        points for each successive 4 quarters.
    ``(f) Designation of Investment Options for Retirement Security 
Account.--
            ``(1) Designation.--Each electing individual shall 
        designate 1 or more investment options for the individual's 
        retirement security account to which retirement security 
        account contributions on behalf of such individual are to be 
        credited.
            ``(2) Form of designation.--The designation described in 
        paragraph (1) shall be made in such manner and at such 
        intervals as the Commissioner may prescribe in order to ensure 
        ease of administration and reductions in burdens on employers.
            ``(3) Designation in absence of designation by 
        individual.--In any case in which no designation of an 
        investment option for an individual's retirement security 
        account is made, the Commissioner shall make such a designation 
        in accordance with regulations.

              ``treatment of retirement security accounts

    ``Sec. 253. Except as otherwise provided in this part, any 
retirement security account shall be treated in the same manner as an 
individual account in the Thrift Savings Fund under subchapter III of 
chapter 84 of title 5, United States Code.

              ``retirement security account distributions

    ``Sec. 254. (a) Date of Initial Distribution.--Except as provided 
in subsection (c), distributions may only be made from a retirement 
security account of an electing individual on and after the date on 
which the individual begins receiving benefits under this title.
    ``(b) Forms of Distribution.--
            ``(1) Required monthly payments.--Except as provided in 
        paragraph (2), beginning with the date determined under 
        subsection (a), an amount equal to not less than 75 percent of 
        the balance in a retirement security account, as elected by the 
        account holder (in such form and manner as shall be prescribed 
        in regulations of the Retirement Security Account Fund 
        Investment Board), shall be paid by means of the purchase of 
        annuities or equal monthly payments over the life expectancy of 
        the electing individual (determined under reasonable actuarial 
        assumptions) in accordance with requirements (which shall be 
        provided in regulations of the Board) similar to the 
        requirements applicable to payments of benefits under 
        subchapter III of chapter 84 of title 5, United States Code, 
        and providing for indexing for inflation.
            ``(2) Payment of excess funds.--To the extent funds remain 
        in an individual's retirement security account after the 
        application of paragraph (1), such funds shall be payable to 
        the individual in such manner and in such amounts as determined 
        by the individual, in accordance with rules established by the 
        Retirement Security Fund Investment Board.
    ``(c) Distribution in the Event of Death Before the Date of Initial 
Distribution.--If the individual dies before the date determined under 
subsection (a), the balance in such individual's retirement security 
account shall be distributed in a lump sum to the individual's heirs, 
under rules established by the Retirement Security Fund Investment 
Board.
    ``(d) Tax Treatment of Distributions.--All distributions under this 
section shall be exempt from any taxation under the Internal Revenue 
Code of 1986.

                       ``retirement security fund

    ``Sec. 255. (a) Establishment.--There is established and maintained 
in the Treasury of the United States a Retirement Security Fund in the 
same manner as the Thrift Savings Fund under sections 8437, 8438, and 
8439 of title 5, United States Code.
    ``(b) Retirement Security Fund Investment Board.--
            ``(1) In general.--There is established and operated in the 
        Executive Branch of the Government a Retirement Security Fund 
        Investment Board (referred to in this section as the `Board') 
        in the same manner as the Federal Retirement Thrift Investment 
        Board under subchapter VII of chapter 84 of title 5, United 
        States Code.
            ``(2) Specific investment and reporting duties.--
                    ``(A) In general.--The Retirement Security Fund 
                Investment Board shall manage and report on the 
                activities of the Retirement Security Fund and the 
                retirement security accounts of such Fund in the same 
                manner as the Federal Retirement Thrift Investment 
                Board manages and reports on the Thrift Savings Fund 
                and the individual accounts of such Fund under 
                subchapter VII of chapter 84 of title 5, United States 
                Code.
                    ``(B) Study and report on increased investment 
                options.--
                            ``(i) Study.--The Retirement Security Fund 
                        Investment Board shall conduct a study 
                        regarding ways to increase an individual's 
                        investment options with respect to such 
                        individual's retirement security account.
                            ``(ii) Report.--Not later than 2 years 
                        after the date of enactment of the Social 
                        Security for the 21st Century Act, the 
                        Retirement Security Fund Investment Board shall 
                        submit a report to the President and Congress 
                        that contains a detailed statement of the 
                        results of the study conducted pursuant to 
                        clause (i), together with the Board's 
                        recommendations for such legislative actions as 
                        the Board considers appropriate.

     ``budgetary treatment of retirement security fund and accounts

    ``Sec. 256. The receipts and disbursements of the Retirement 
Security Fund and any accounts within such fund shall not be included 
in the totals of the budget of the United States Government as 
submitted by the President or of the congressional budget and shall be 
exempt from any general budget limitation imposed by statute on 
expenditures and net lending (budget outlays) of the United States 
Government.''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to elections made after December 31, 2000.

SEC. 2. ADJUSTMENT OF SOCIAL SECURITY BENEFIT FOR ELECTING INDIVIDUALS.

    (a) Reduction of Benefits Under OASDI Upon Election Under Part B.--
Section 215 of the Social Security Act (42 U.S.C. 415) is amended by 
adding at the end the following:

            ``reduction on account of election under part b

    ``(j)(1) Notwithstanding any other provision of this section, the 
primary insurance amount for an electing individual (as defined in 
section 251), as determined without regard to this subsection, shall be 
reduced by 50 percent.
    ``(2) A reduction of benefits for an electing individual under 
paragraph (1) shall not be taken into account in determining the 
benefit of any individual which is dependent upon the wages and self-
employment income of the electing individual.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect with respect to benefits received after December 31, 2000.

SEC. 3. PERSONAL EARNINGS AND BENEFIT ESTIMATE STATEMENT.

    (a) In General.--Section 1143(a)(2) of the Social Security Act (42 
U.S.C. 1320b-13(a)(2)) is amended--
            (1) in subparagraph (C), by striking ``and'' at the end;
            (2) in subparagraph (D), by striking the period at the end 
        and inserting ``; and''; and
            (3) by adding at the end the following:
            ``(E) an estimate of the aggregate of the retirement 
        security account contributions under part B of title II of the 
        eligible individual (as defined in section 251) and any amounts 
        in the retirement security account of such individual as shown 
        by the records of the Secretary on the date of the request.''.

SEC. 4. ESTABLISHMENT OF SPECIAL RESERVE ACCOUNT.

    (a) In General.--Section 201 of the Social Security Act is amended 
by adding at the end the following new subsection:
    ``(n)(1) There is established within the Treasury a special reserve 
account to be known as the `Protect Social Security Account' (in this 
subsection referred to as the `account'). The account shall be used to 
save budget surpluses until a reform measure is enacted to ensure the 
long-term solvency of the Federal Old Age and Survivors Insurance Trust 
Fund and the Federal Disability Insurance Trust Fund.
    ``(2) The Secretary of the Treasury shall pay into the account at 
the end of each fiscal year in the fiscal-year period beginning on 
October 1, 1999, and ending on September 30, 2010, an amount which in 
the aggregate, at the end the fiscal-year period, will equal an amount 
equal to 70 percent of the projected surplus (if any) in the total 
budget of the United States Government for that fiscal-year period.
    ``(3) Within 10 days after the date of enactment of this 
subsection, the Secretary of the Treasury, in consultation with the 
Director of the Office of Management and Budget, shall project the 
budget surplus (if any) for the total budget of the United States 
Government for the fiscal-year period beginning on October 1, 1999, and 
ending on September 30, 2010.
    ``(4) The Secretary of the Treasury shall invest the funds held in 
the account pending enactment of the reform measure referred to in 
paragraph (1). The purposes for which obligations of the United States 
may be issued under chapter 31 of title 31, United States Code, are 
hereby extended to authorize, in the manner provided in subsection (d), 
the issuance at par of public-debt obligations for purchase for the 
account. The interest on, and the proceeds from redemption of, any 
obligations held in the account shall be credited to and form a part of 
the account.
    ``(5) In this subsection, the term `total budget of the United 
States Government' means all spending and receipt accounts of the 
United States Government that are designated as on-budget or off-budget 
accounts.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to fiscal years beginning on or after October 1, 1999.