II

106TH CONGRESS

1ST SESSION S. 588

To amend title II of the Social Security Act to provide for retirement security

accounts funded by employee social security payroll deductions, to establish the Protect Social Security Account into which the Secretary of

the Treasury shall deposit budget surpluses until a reform measure

is enacted to ensure the long-term solvency of the OASDI trust funds,

and for other purposes.

IN THE SENATE OF THE UNITED STATES

MARCH 11, 1999

Mr. BUNNING introduced the following bill; which was read twice and referred

to the Committee on Finance

A BILL

To amend title II of the Social Security Act to provide

for retirement security accounts funded by employee social security payroll deductions, to establish the Protect

Social Security Account into which the Secretary of the

Treasury shall deposit budget surpluses until a reform

measure is enacted to ensure the long-term solvency of

the OASDI trust funds, and for other purposes.

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

2 This Act may be cited as the ‘‘Social Security for the

3 21st Century Act’’.

4 SEC. 2. RETIREMENT SECURITY ACCOUNTS.

5 (a) ESTABLISHMENT AND MAINTENANCE OF RE6 TIREMENT SECURITY ACCOUNTS.—Title II of the Social

7 Security Act (42 U.S.C. 401 et seq.) is amended—

8 (1) by inserting before section 201 the follow9 ing:

10 ‘‘PART A—INSURANCE BENEFITS’’;

11 and

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

13 ‘‘PART B—RETIREMENT SECURITY ACCOUNTS

14 ‘‘DEFINITIONS

15 ‘‘SEC. 251. In this part—

16 ‘‘(1) COMMISSIONER.—The term ‘Commis17 sioner’ means the Commissioner of Social Security.

18 ‘‘(2) ELECTING INDIVIDUAL.—The term ‘elect19 ing individual’ means an individual with respect to

20 whom an election under section 252 is in effect.

21 ‘‘(3) ELIGIBLE INDIVIDUAL.—The term ‘eligible

22 individual’ means an individual—

23 ‘‘(A) who is 18 years of age or older; and

24 ‘‘(B) who is receiving wages subject to tax

25 under section 3101(a) of the Internal Revenue
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1 Code of 1986 or self-employment income sub2 ject to tax under section 1401(a) of such Code.

3 ‘‘(4) RETIREMENT SECURITY ACCOUNT.—The

4 term ‘retirement security account’ means any retire5 ment security account in the Retirement Security

6 Fund (established under section 255(a)) which is ad7 ministered by the Retirement Security Fund Invest8 ment Board (established under section 255(b)).

9 ‘‘(5) RETIREMENT SECURITY ACCOUNT CON10 TRIBUTION.—The term ‘retirement security account

11 contribution’ has the meaning given such term by

12 section 252(e)(2)(A).

13 ‘‘ELECTION AND ESTABLISHMENT OF RETIREMENT

14 SECURITY ACCOUNTS

15 ‘‘SEC. 252. (a) ELECTION.—An eligible individual

16 may elect to make retirement security account contribu17 tions to a retirement security account established under

18 subsection (d) and maintained for the benefit of such indi19 vidual.

20 ‘‘(b) ELECTION PERIOD.—An election under sub21 section (a) shall be irrevocable and shall be effective with

22 respect to wages paid or self-employment income earned

23 during any quarter of coverage beginning after the date

24 of such election.

25 ‘‘(c) FORM OF ELECTION.—An election under this

26 section shall be made—
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1 ‘‘(1) on W–4 forms (or any successor form), or

2 ‘‘(2) in such other manner as the Commissioner

3 may prescribe in order to ensure ease of administra4 tion and reductions in burdens on employers.

5 ‘‘(d) ESTABLISHMENT.—The Commissioner, within

6 30 days of the receipt of the first contribution received

7 pursuant to subsection (e) with respect to any electing in8 dividual, shall establish in the name of such individual a

9 retirement security account. The retirement security ac10 count shall be identified to the account holder by means

11 of the account holder’s social security account number.

12 ‘‘(e) CONTRIBUTIONS.—

13 ‘‘(1) IN GENERAL.—The Secretary of the

14 Treasury shall transfer from the Federal Old-Age

15 and Survivors Insurance Trust Fund, for crediting

16 by the Commissioner to a retirement security ac17 count of an electing individual, a retirement security

18 account contribution of such individual.

19 ‘‘(2) RETIREMENT SECURITY ACCOUNT CON20 TRIBUTION.—

21 ‘‘(A) IN GENERAL.—For purposes of this

22 part, the term ‘retirement security account con23 tribution’ means, with respect to any quarter of

24 coverage during an election period under sub25 section (b), an amount equal to the applicable
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1 percentage of the amount collected under sec2 tion 3101(a) or 1401(a) of the Internal Reve3 nue Code of 1986 on account of wages or self4 employment income of an electing individual for

5 such quarter.

6 ‘‘(B) APPLICABLE PERCENTAGE.—For

7 purposes of subparagraph (A), the applicable

8 percentage for any quarter of coverage during

9 an election period under subsection (b) shall be

10 equal to—

11 ‘‘(i) in the case of amounts collected

12 under section 3101(a) of the Internal Rev13 enue Code of 1986, 2.5 percent for the

14 first 4 quarters, increased (but not above

15 50 percent) by 2.5 percentage points for

16 each successive 4 quarters, and

17 ‘‘(ii) in the case of amounts collected

18 under section 1401(a) of such Code, 1.25

19 percent for the first 4 quarters, increased

20 (but not above 25 percent) by 1.25 per21 centage points for each successive 4 quar22 ters.

23 ‘‘(f) DESIGNATION OF INVESTMENT OPTIONS FOR

24 RETIREMENT SECURITY ACCOUNT.—
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1 ‘‘(1) DESIGNATION.—Each electing individual

2 shall designate 1 or more investment options for the

3 individual’s retirement security account to which re4 tirement security account contributions on behalf of

5 such individual are to be credited.

6 ‘‘(2) FORM OF DESIGNATION.—The designation

7 described in paragraph (1) shall be made in such

8 manner and at such intervals as the Commissioner

9 may prescribe in order to ensure ease of administra10 tion and reductions in burdens on employers.

11 ‘‘(3) DESIGNATION IN ABSENCE OF DESIGNA12 TION BY INDIVIDUAL.—In any case in which no des13 ignation of an investment option for an individual’s

14 retirement security account is made, the Commis15 sioner shall make such a designation in accordance

16 with regulations.

17 ‘‘TREATMENT OF RETIREMENT SECURITY ACCOUNTS

18 ‘‘SEC. 253. Except as otherwise provided in this part,

19 any retirement security account shall be treated in the

20 same manner as an individual account in the Thrift Sav21 ings Fund under subchapter III of chapter 84 of title 5,

22 United States Code.

23 ‘‘RETIREMENT SECURITY ACCOUNT DISTRIBUTIONS

24 ‘‘SEC. 254. (a) DATE OF INITIAL DISTRIBUTION.—

25 Except as provided in subsection (c), distributions may

26 only be made from a retirement security account of an
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1 electing individual on and after the date on which the indi2 vidual begins receiving benefits under this title.

3 ‘‘(b) FORMS OF DISTRIBUTION.—

4 ‘‘(1) REQUIRED MONTHLY PAYMENTS.—Except

5 as provided in paragraph (2), beginning with the

6 date determined under subsection (a), an amount

7 equal to not less than 75 percent of the balance in

8 a retirement security account, as elected by the ac9 count holder (in such form and manner as shall be

10 prescribed in regulations of the Retirement Security

11 Account Fund Investment Board), shall be paid by

12 means of the purchase of annuities or equal monthly

13 payments over the life expectancy of the electing in14 dividual (determined under reasonable actuarial as15 sumptions) in accordance with requirements (which

16 shall be provided in regulations of the Board) simi17 lar to the requirements applicable to payments of

18 benefits under subchapter III of chapter 84 of title

19 5, United States Code, and providing for indexing

20 for inflation.

21 ‘‘(2) PAYMENT OF EXCESS FUNDS.—To the ex22 tent funds remain in an individual’s retirement secu23 rity account after the application of paragraph (1),

24 such funds shall be payable to the individual in such

25 manner and in such amounts as determined by the
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1 individual, in accordance with rules established by

2 the Retirement Security Fund Investment Board.

3 ‘‘(c) DISTRIBUTION IN THE EVENT OF DEATH BE4 FORE THE DATE OF INITIAL DISTRIBUTION.—If the indi5 vidual dies before the date determined under subsection

6 (a), the balance in such individual’s retirement security

7 account shall be distributed in a lump sum to the individ8 ual’s heirs, under rules established by the Retirement Se9 curity Fund Investment Board.

10 ‘‘(d) TAX TREATMENT OF DISTRIBUTIONS.—All dis11 tributions under this section shall be exempt from any tax12 ation under the Internal Revenue Code of 1986.

13 ‘‘RETIREMENT SECURITY FUND

14 ‘‘SEC. 255. (a) ESTABLISHMENT.—There is estab15 lished and maintained in the Treasury of the United

16 States a Retirement Security Fund in the same manner

17 as the Thrift Savings Fund under sections 8437, 8438,

18 and 8439 of title 5, United States Code.

19 ‘‘(b) RETIREMENT SECURITY FUND INVESTMENT

20 BOARD.—

21 ‘‘(1) IN GENERAL.—There is established and

22 operated in the Executive Branch of the Government

23 a Retirement Security Fund Investment Board (re24 ferred to in this section as the ‘Board’) in the same

25 manner as the Federal Retirement Thrift Invest-
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1 ment Board under subchapter VII of chapter 84 of

2 title 5, United States Code.

3 ‘‘(2) SPECIFIC INVESTMENT AND REPORTING

4 DUTIES.—

5 ‘‘(A) IN GENERAL.—The Retirement Secu6 rity Fund Investment Board shall manage and

7 report on the activities of the Retirement Secu8 rity Fund and the retirement security accounts

9 of such Fund in the same manner as the Fed10 eral Retirement Thrift Investment Board man11 ages and reports on the Thrift Savings Fund

12 and the individual accounts of such Fund under

13 subchapter VII of chapter 84 of title 5, United

14 States Code.

15 ‘‘(B) STUDY AND REPORT ON INCREASED

16 INVESTMENT OPTIONS.—

17 ‘‘(i) STUDY.—The Retirement Secu18 rity Fund Investment Board shall conduct

19 a study regarding ways to increase an indi20 vidual’s investment options with respect to

21 such individual’s retirement security ac22 count.

23 ‘‘(ii) REPORT.—Not later than 2

24 years after the date of enactment of the

25 Social Security for the 21st Century Act,
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1 the Retirement Security Fund Investment

2 Board shall submit a report to the Presi3 dent and Congress that contains a detailed

4 statement of the results of the study con5 ducted pursuant to clause (i), together

6 with the Board’s recommendations for

7 such legislative actions as the Board con8 siders appropriate.

9 ‘‘BUDGETARY TREATMENT OF RETIREMENT SECURITY

10 FUND AND ACCOUNTS

11 ‘‘SEC. 256. The receipts and disbursements of the

12 Retirement Security Fund and any accounts within such

13 fund shall not be included in the totals of the budget of

14 the United States Government as submitted by the Presi15 dent or of the congressional budget and shall be exempt

16 from any general budget limitation imposed by statute on

17 expenditures and net lending (budget outlays) of the

18 United States Government.’’.

19 (b) EFFECTIVE DATE.—The amendments made by

20 this section shall apply with respect to elections made after

21 December 31, 2000.

22 SEC. 2. ADJUSTMENT OF SOCIAL SECURITY BENEFIT FOR

23 ELECTING INDIVIDUALS.

24 (a) REDUCTION OF BENEFITS UNDER OASDI UPON

25 ELECTION UNDER PART B.—Section 215 of the Social
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1 Security Act (42 U.S.C. 415) is amended by adding at

2 the end the following:

3 ‘‘REDUCTION ON ACCOUNT OF ELECTION UNDER PART B

4 ‘‘(j)(1) Notwithstanding any other provision of this

5 section, the primary insurance amount for an electing in6 dividual (as defined in section 251), as determined without

7 regard to this subsection, shall be reduced by 50 percent.

8 ‘‘(2) A reduction of benefits for an electing individual

9 under paragraph (1) shall not be taken into account in

10 determining the benefit of any individual which is depend11 ent upon the wages and self-employment income of the

12 electing individual.’’.

13 (b) EFFECTIVE DATE.—The amendment made by

14 this section shall take effect with respect to benefits re15 ceived after December 31, 2000.

16 SEC. 3. PERSONAL EARNINGS AND BENEFIT ESTIMATE

17 STATEMENT.

18 (a) IN GENERAL.—Section 1143(a)(2) of the Social

19 Security Act (42 U.S.C. 1320b–13(a)(2)) is amended—

20 (1) in subparagraph (C), by striking ‘‘and’’ at

21 the end;

22 (2) in subparagraph (D), by striking the period

23 at the end and inserting ‘‘; and’’; and

24 (3) by adding at the end the following:

25 ‘‘(E) an estimate of the aggregate of the retire26 ment security account contributions under part B of
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1 title II of the eligible individual (as defined in sec2 tion 251) and any amounts in the retirement secu3 rity account of such individual as shown by the

4 records of the Secretary on the date of the request.’’.

5 SEC. 4. ESTABLISHMENT OF SPECIAL RESERVE ACCOUNT.

6 (a) IN GENERAL.—Section 201 of the Social Security

7 Act is amended by adding at the end the following new

8 subsection:

9 ‘‘(n)(1) There is established within the Treasury a

10 special reserve account to be known as the ‘Protect Social

11 Security Account’ (in this subsection referred to as the

12 ‘account’). The account shall be used to save budget sur13 pluses until a reform measure is enacted to ensure the

14 long-term solvency of the Federal Old Age and Survivors

15 Insurance Trust Fund and the Federal Disability Insur16 ance Trust Fund.

17 ‘‘(2) The Secretary of the Treasury shall pay into the

18 account at the end of each fiscal year in the fiscal-year

19 period beginning on October 1, 1999, and ending on Sep20 tember 30, 2010, an amount which in the aggregate, at

21 the end the fiscal-year period, will equal an amount equal

22 to 70 percent of the projected surplus (if any) in the total

23 budget of the United States Government for that fiscal24 year period.
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1 ‘‘(3) Within 10 days after the date of enactment of

2 this subsection, the Secretary of the Treasury, in consulta3 tion with the Director of the Office of Management and

4 Budget, shall project the budget surplus (if any) for the

5 total budget of the United States Government for the fis6 cal-year period beginning on October 1, 1999, and ending

7 on September 30, 2010.

8 ‘‘(4) The Secretary of the Treasury shall invest the

9 funds held in the account pending enactment of the reform

10 measure referred to in paragraph (1). The purposes for

11 which obligations of the United States may be issued

12 under chapter 31 of title 31, United States Code, are here13 by extended to authorize, in the manner provided in sub14 section (d), the issuance at par of public-debt obligations

15 for purchase for the account. The interest on, and the pro16 ceeds from redemption of, any obligations held in the ac17 count shall be credited to and form a part of the account.

18 ‘‘(5) In this subsection, the term ‘total budget of the

19 United States Government’ means all spending and re20 ceipt accounts of the United States Government that are

21 designated as on-budget or off-budget accounts.’’.

22 (b) EFFECTIVE DATE.—The amendment made by

23 this section shall apply to fiscal years beginning on or

24 after October 1, 1999.

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