I

106TH CONGRESS

2D SESSION H. R. 5659

To amend title II of the Social Security Act provide for personal Social

Security accounts and to maintain the solvency of the old-age, survivors,

and disability insurance program.

IN THE HOUSE OF REPRESENTATIVES

DECEMBER 14, 2000

Mr. KASICH introduced the following bill; which was referred to the Committee

on Ways and Means

A BILL

To amend title II of the Social Security Act provide for

personal Social Security accounts and to maintain the

solvency of the old-age, survivors, and disability insurance program.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Personal Social Secu5 rity Account Act of 2000’’.
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1 TITLE I—PERSONAL SOCIAL

2 SECURITY ACCOUNTS

3 SEC. 101. PERSONAL SOCIAL SECURITY ACCOUNTS.

4 Title II of the Social Security Act is amended—

5 (1) by inserting before section 201 the fol6 lowing:

7 ‘‘PART A—INSURANCE BENEFITS’’;

8 and

9 (2) by adding at the end the following new part:

10 ‘‘PART B—PERSONAL SOCIAL SECURITY ACCOUNTS

11 ‘‘PERSONAL SOCIAL SECURITY ACCOUNT FUND

12 ‘‘SEC. 251. (a) ESTABLISHMENT.—There is estab13 lished in the Treasury of the United States a Personal

14 Social Security Account Fund. Subject to, and to the ex15 tent consistent with, the provisions of this part, the Com16 missioner of Social Security shall exercise the same pow17 ers, duties, and responsibilities with respect to the Fund

18 as the powers, duties and responsibilities exercised by the

19 Executive Director with respect to the Thrift Savings

20 Fund.

21 ‘‘(b) AMOUNTS HELD BY FUND.—The Personal So22 cial Security Account Fund consists of the sum of all

23 amounts transferred to the Fund under section 252, in24 creased by the total net earnings from investments of

25 sums held in the Fund or reduced by the total net losses
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1 from investments of sums held in the Fund, and reduced

2 by the total amount of payments made from the Fund (in3 cluding payments for administrative expenses).

4 ‘‘(c) USE OF FUND.—

5 ‘‘(1) IN GENERAL.—The sums in the Personal

6 Social Security Account Fund are appropriated and

7 shall remain available without fiscal year

8 limitation—

9 ‘‘(A) to invest under section 253,

10 ‘‘(B) to make distributions under section

11 254,

12 ‘‘(C) to pay the administrative expenses of

13 this part, and

14 ‘‘(D) to purchase insurance as provided in

15 section 255(c)(2).

16 ‘‘(2) EXCLUSIVE PURPOSES.—The sums in the

17 Personal Social Security Account Fund shall not be

18 appropriated for any purpose other than the pur19 poses specified in this section and may not be used

20 for any other purpose.

21 ‘‘PERSONAL SOCIAL SECURITY ACCOUNTS

22 ‘‘SEC. 252. (a) ESTABLISHMENT OF PERSONAL SO23 CIAL SECURITY PLUS ACCOUNTS.—As soon as practicable

24 after the submission by an eligible individual of the re25 quest referred to in subsection (b)(3), the Commissioner

26 of Social Security shall establish in the Personal Social
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1 Security Account Fund a personal social security account

2 for such eligible individual. Each account shall be identi3 fied to its account holder by means of the account holder’s

4 social security account number.

5 ‘‘(b) ELIGIBLE INDIVIDUAL.—For purposes of this

6 part, the term ‘eligible individual’ means an individual

7 who—

8 ‘‘(1) was born after December 31, 1945,

9 ‘‘(2) has been credited for any calendar year

10 with 4 quarters of coverage, and

11 ‘‘(3) has submitted to the Commissioner of So12 cial Security a written request for the establishment

13 of a personal social security account for such indi14 vidual.

15 ‘‘(c) FORM OF WRITTEN REQUEST.—The request de16 scribed in subsection (b)(3) shall be made in such form

17 and manner as the Commissioner of Social Security may

18 prescribe by regulation in order to ensure ease of adminis19 tration.

20 ‘‘(d) ACCOUNT BALANCE.—The balance in an indi21 vidual’s personal social security account at any time is the

22 excess of—

23 ‘‘(1) the sum of—
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1 ‘‘(A) all deposits made to the Personal So2 cial Security Account Fund and credited to the

3 account under subsection (e), and

4 ‘‘(B) the total amount of allocations made

5 to and reductions made in the account pursuant

6 to subsection (f),

7 over

8 ‘‘(2) the amounts paid out of the account with

9 respect to such individual under this part.

10 ‘‘(e) AMOUNTS TRANSFERRED FROM THE FEDERAL

11 OLD-AGE AND SURVIVORS INSURANCE TRUST FUND.—

12 ‘‘(1) IN GENERAL.—Not later than 9 months

13 after each calendar year after 2000, the Secretary of

14 the Treasury shall transfer from the Federal Old15 Age and Survivors Insurance Trust Fund to the

16 Personal Social Security Account Fund, for crediting

17 by the Commissioner of Social Security to each per18 sonal social security account established in the Per19 sonal Social Security Account Fund for such indi20 vidual as of the end of such calendar year, an

21 amount equal to the product derived by

22 multiplying—

23 ‘‘(A) such individual’s wages paid, and

24 self-employment income derived, in such cal25 endar year, by
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1 ‘‘(B) such individual’s transfer percentage

2 for such calendar year.

3 Proper adjustments shall be made in amounts trans4 ferred for subsequent calendar years to the extent

5 that amounts transferred for prior calendar years

6 were greater or less than the proper amounts.

7 ‘‘(2) TRANSFER PERCENTAGE.—For purposes

8 of paragraph (1)(B), the term ‘transfer percentage’

9 of an individual for a calendar year means the ex10 cess (not less than zero) of—

11 ‘‘(A) 3.5 percent, over

12 ‘‘(B) the product derived by multiplying

13 2.5 percent by a fraction—

14 ‘‘(i) the numerator of which is the

15 amount of such individual’s wages paid,

16 and self-employment income derived, in

17 such calendar year (as certified to the Sec18 retary of the Treasury by the Commis19 sioner of Social Security), and

20 ‘‘(ii) the denominator of which is the

21 contribution and benefit base (determined

22 under section 230) for such calendar year.

23 ‘‘(f) ALLOCATION OF EARNINGS AND LOSSES.—Pur24 suant to regulations which shall be prescribed by the Com25 missioner, the Commissioner shall allocate to each per-
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1 sonal social security account an amount equal to the net

2 earnings and net losses from each investment of sums in

3 the Social Security Account Fund which are attributable,

4 on a pro rata basis, to sums credited to such account, re5 duced by an appropriate share of the administrative ex6 penses paid out of the net earnings, as determined by the

7 Commissioner.

8 ‘‘RULES GOVERNING PERSONAL SOCIAL SECURITY AC9 COUNTS RELATING TO INVESTMENT, ACCOUNTING,

10 REPORTING, AND TAXATION

11 ‘‘SEC. 253. (a) IN GENERAL.—Under regulations

12 which shall be prescribed by the Commissioner of Social

13 Security, and subject to the provisions of this part, the

14 provisions of—

15 ‘‘(1) section 8438 of title 5, United States Code

16 (relating to investment of the Thrift Savings Fund),

17 ‘‘(2) section 8439(b) of such title (relating to

18 engagement of independent qualified public account19 ant),

20 ‘‘(3) section 8439(c) of such title (relating to

21 periodic statements and summary descriptions of in22 vestment options),

23 ‘‘(4) section 8439(d) of such title (relating to

24 assumption of risk), and
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1 ‘‘(5) section 8440 of such title (relating to tax

2 treatment of the Thrift Savings Fund), other than

3 subsection (c) thereof,

4 shall apply with respect to the Personal Social Security

5 Fund and accounts maintained in such Fund in the same

6 manner and to the same extent as such provisions relate

7 to the Thrift Savings Fund and personal social security

8 accounts maintained in such Fund.

9 ‘‘(b) RELATED RULES.—For purposes of subsection

10 (a)—

11 ‘‘(1) the Board of Trustees shall exercise with

12 respect to the Personal Social Security Fund the

13 same powers, duties, and responsibilities as are re14 quired to be exercised by the Federal Retirement

15 Thrift Investment Board under the provisions re16 ferred to in subsection (a) with respect to the Thrift

17 Savings Fund,

18 ‘‘(2) the Commissioner of Social Security shall

19 exercise with respect to the Personal Social Security

20 Fund the same powers, duties, and responsibilities

21 as are required to be exercised by the Executive Di22 rector under the provisions referred to in subsection

23 (a) with respect to the Thrift Savings Fund, and

24 ‘‘(3) references in such sections 8438 and 8439

25 to an employee, Member, former employee, or former
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1 Member shall be deemed references to an account

2 holder of a social security account in the Personal

3 Social Security Fund.

4 ‘‘DISTRIBUTIONS FROM PERSONAL SOCIAL SECURITY

5 ACCOUNTS

6 ‘‘SEC. 254. (a) IN GENERAL.—Except as provided in

7 subsections (b) and (c), the balance in a personal social

8 security account—

9 ‘‘(1) shall be distributed to the account holder

10 commencing with the date of the commencement of

11 such account holder’s entitlement to old-age insur12 ance benefits under section 202(a), and

13 ‘‘(2) shall be paid, as elected by the account

14 holder (in such form and manner as shall be pre15 scribed in regulations of the Commissioner of Social

16 Security) in the form of—

17 ‘‘(A) equal annual installments over the

18 life expectancy of the account holder (deter19 mined as of the date of the distribution under

20 reasonable actuarial assumptions), or

21 ‘‘(B) otherwise in the form of an imme22 diate annuity (as shall be prescribed in regula23 tions of the Commissioner of Social Security).

24 ‘‘(b) DISABILITY BENEFICIARIES.—Upon application

25 made to the Commissioner under this subsection (in such

26 form and manner as shall be prescribed by the Commis-
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1 sioner) by an individual who is entitled to disability insur2 ance benefits under section 223, the balance in such indi3 vidual’s personal social security account shall be paid to

4 such individual in the form of equal monthly installments

5 over the life expectancy of the individual (determined as

6 of the date of the commencement of such payments under

7 reasonable actuarial assumptions), except that such pay8 ments shall be payable under this subsection only for

9 months for which such individual is entitled to such bene10 fits.

11 ‘‘(c) LUMP SUM DISTRIBUTIONS OF MINIMAL

12 AMOUNTS.—

13 ‘‘(1) IN GENERAL.—Notwithstanding sub14 sections (a) and (b), if distributions from an individ15 ual’s personal social security account would other16 wise commence under subsection (a) or (b), and the

17 balance in the account is $3,500 or less, the Com18 missioner of Social Security shall pay the balance to

19 the account holder in a single payment.

20 ‘‘(2) COST-OF-LIVING ADJUSTMENTS.—Under

21 regulations of the Commissioner of Social Security,

22 effective January 1 of each calendar year after

23 2000, the dollar amount referred to in paragraph

24 (1) shall be adjusted annually by the same percent-
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1 age change as the percentage change then taking ef2 fect under section 230.

3 ‘‘FIDUCIARY RESPONSIBILITIES

4 ‘‘SEC 255. (a) IN GENERAL.—Under regulations of

5 the Secretary of Labor, the provisions of sections 8477

6 and 8478 of title 5, United States Code, shall apply in

7 connection with the Personal Social Security Fund and the

8 personal social security accounts maintained in such Fund

9 in the same manner and to the same extent as such provi10 sions apply in connection with the Thrift Savings Fund

11 and accounts maintained in the Thrift Savings Fund.

12 ‘‘(b) INVESTIGATIVE AUTHORITY.—Any authority

13 available to the Secretary of Labor under section 504 of

14 the Employee Retirement Income Security Act of 1974 is

15 hereby made available to the Secretary of Labor, and any

16 officer designated by the Secretary of Labor, to determine

17 whether any person has violated, or is about to violate,

18 any provision applicable under subsection (a).

19 ‘‘(c) EXCULPATORY PROVISIONS; INSURANCE.—

20 ‘‘(1) IN GENERAL.—Any provision in an agree21 ment or instrument which purports to relieve a fidu22 ciary from responsibility or liability for any responsi23 bility, obligation, or duty under this part shall be

24 void.

25 ‘‘(2) INSURANCE.—Amounts in the Personal

26 Social Security Fund available for administrative ex-
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1 penses shall be available and may be used at the dis2 cretion of the Commissioner of Social Security to

3 purchase insurance to cover potential liability of per4 sons who serve in a fiduciary capacity with respect

5 to the Fund and personal social security accounts

6 maintained therein, without regard to whether a pol7 icy of insurance permits recourse by the insurer

8 against the fiduciary in the case of a breach of a fi9 duciary obligation.

10 ‘‘ASSIGNMENT, ALIENATION, AND TREATMENT OF

11 DECEASED INDIVIDUALS

12 ‘‘SEC. 256. (a) ASSIGNMENT AND ALIENATION.—

13 Under regulations which shall be prescribed by the Com14 missioner of Social Security, rules relating to assignment

15 and alienation applicable under chapter 84 of title 5,

16 United States Code, with respect to amounts held in ac17 counts in the Thrift Savings Fund shall apply with respect

18 to amounts held in personal social security accounts in the

19 Personal Social Security Fund.

20 ‘‘(b) TREATMENT OF ACCOUNTS OF DECEASED INDI21 VIDUALS.—In the case of a deceased individual who is the

22 account holder with respect to a personal social security

23 account and who dies before distributions from the ac24 count have commenced under section 254, upon receipt

25 of notification of such individual’s death, the Commis26 sioner of Social Security shall close the account and shall
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1 transfer the balance in such account to the personal social

2 security account of such account holder’s surviving spouse

3 or, if there is no such account of a surviving spouse, to

4 the duly appointed legal representative of the estate of the

5 deceased account holder, or if there is no such representa6 tive, to the person or persons determined to be entitled

7 thereto under the laws of the domicile of the deceased ac8 count holder.’’.

9 TITLE II—MAINTAINING THE

10 SOLVENCY OF THE OLD-AGE,

11 SURVIVORS, AND DISABILITY

12 INSURANCE PROGRAM

13 SEC. 201. MODIFICATION OF INDEXATION OF INITIAL BENE14 FITS.

15 Section 215(a)(1)(B) of the Social Security Act (42

16 U.S.C. 415(a)(1)(B)) is amended—

17 (1) by redesignating clause (iii) as clause (vi);

18 (2) in clause (ii), by striking ‘‘For individuals’’

19 and inserting ‘‘Subject to clause (iii), for individ20 uals’’;

21 (3) by inserting after clause (ii) the following

22 new clauses:

23 ‘‘(iii) For individuals who were born after December

24 31, 1945, and who either initially meet all requirements

25 for entitlement to old-age insurance benefits or disability
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1 insurance benefits (other than applying therefor), or die

2 (before meeting such requirements for such benefits), in

3 any calendar year after 2002, each of the amounts so es4 tablished under the preceding provisions of this subpara5 graph shall be equal to the product derived by multiplying

6 such amount (as determined before the application of this

7 clause) by the quotient derived by dividing—

8 ‘‘(I) the applicable change in the CPI for the

9 first of the 2 preceding calendar years, by

10 ‘‘(II) applicable change in the national average

11 wage index for the first of the 2 preceding calendar

12 years.

13 ‘‘(iv) For purposes of clause (iii)(I), the term ‘appli14 cable change in the CPI’ for a calendar year means the

15 excess of—

16 ‘‘(I) the arithmetical mean of the Consumer

17 Price Index for Urban Wage Earners and Clerical

18 Workers (issued by the Bureau of Labor Statistics)

19 for the 12 months in such calendar year, over

20 ‘‘(II) the arithmetical mean of such Consumer

21 Price Index for the 12 months in calendar year

22 2000.

23 ‘‘(v) For purposes of clause (iii)(II), the term ‘appli24 cable change in the national average wage index’ for a cal25 endar year means the excess of—
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1 ‘‘(I) the national average wage index (as de2 fined in section 209(k)(1)) for such calendar year,

3 over

4 ‘‘(II) the national average wage index (as so de5 fined) for calendar year 2000.’’; and

6 (4) in clause (vi) (as redesignated), by striking

7 ‘‘under clause (ii)’’ and inserting ‘‘under the pre8 ceding provisions of this subparagraph’’.

9 SEC. 202. BENEFIT REDUCTION BY REASON OF TRANSFER

10 TO PERSONAL SOCIAL SECURITY ACCOUNT.

11 Subparagraph (A) of section 215(a)(1) of the Social

12 Security Act (42 U.S.C. 415(a)(1)(A)) is amended, in the

13 matter following clause (iii), by striking ‘‘rounded’’ and

14 inserting the following:

15 ‘‘reduced by a percentage equal to the product derived by

multiplying 1 16 ⁄36 percent by the number of months begin17 ning with or after the first month in which occurs a trans18 fer to the individual’s personal social security account pur19 suant to section 252(e)(1) and ending before the first

20 month for which such individual is entitled to old-age or

21 disability insurance benefits (or in which such individual

22 dies before becoming so entitled). The amount determined

23 under this subparagraph shall be rounded’’.
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1 SEC. 203. BORROWING AUTHORITY FOR THE SOCIAL SECU2 RITY TRUST FUNDS TAKING INTO ACCOUNT

3 PRESENT VALUE OF FUTURE BENEFIT RE4 DUCTIONS.

5 Section 201(l) of the Social Security Act (42 U.S.C.

6 401(l)) is amended—

7 (1) in paragraph (1), by striking ‘‘January

8 1988’’ and inserting ‘‘January 2050’’, and by strik9 ing ‘‘the other such Trust Fund, or, subject to para10 graph (5), from the Federal Hospital Insurance

11 Trust Fund established under section 1817,’’ and in12 serting ‘‘the general fund of the Treasury, subject to

13 paragraph (5),’’;

14 (2) in paragraph (2), by striking ‘‘the lending

15 Trust Fund’’ and inserting ‘‘the general fund’’, and

16 by striking ‘‘a rate’’ and all that follows and insert17 ing ‘‘the rate equal to the average market yield

18 (computed by the Managing Trustee on the basis of

19 market quotations as of the end of the calendar

20 month next preceding the date of the loan) on all

21 marketable interest-bearing obligations of the United

22 States then forming a part of the public debt which

23 are not due or callable until after the expiration of

24 four years from the end of such calendar month; ex25 cept that where such average market yield is not a

26 multiple of one-eighth of 1 per centum, the rate of
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1 interest of such loan shall be the multiple of one2 eighth of 1 per centum nearest such market yield.’’;

3 (3) in paragraph (3)(B)(i), in the matter pre4 ceding subclause (I), by striking ‘‘Federal Hospital

5 Insurance Trust Fund’’ each place it appears and

6 inserting ‘‘general fund’’, and by striking ‘‘15 per7 cent’’ and inserting ‘‘100 percent’’;

8 (4) in paragraph (3)(B)(i)(I), by striking ‘‘to9 gether with’’ and all that follows through ‘‘year,’’,

10 and by striking ‘‘15 percent’’ and inserting ‘‘100

11 percent’’;

12 (5) in paragraph (3)(B)(iii)(II), by striking

13 ‘‘other than payments of interest on, and repay14 ments of loans from the Federal Hospital Insurance

15 Trust Fund under paragraph (1),’’;

16 (6) in paragraph (3)(C)(i), by striking ‘‘(i)’’, by

17 striking ‘‘(whether made before or after January 1,

18 1983)’’, and by striking ‘‘and in any event no later

19 than December 31, 1989’’;

20 (7) by striking paragraph (3)(C)(ii); and

21 (8) by amending paragraph (5) to read as fol22 lows:

23 ‘‘(5) The amounts borrowed from the general fund

24 of the Treasury under paragraph (1) shall not exceed the

25 discounted present value of the future reductions in bene-
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1 fits payable from such trust funds by reason of the amend2 ments made by section 202 of the Personal Social Security

3 Account Act of 2000.’’.

Æ