II

106TH CONGRESS

1ST SESSION S. 633

To amend title II of the Social Security Act to require that investment

decisions regarding the social security trust funds be made on the basis

of the best interests of beneficiaries, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MARCH 16, 1999

Mr. ASHCROFT 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 require

that investment decisions regarding the social security

trust funds be made on the basis of the best interests

of beneficiaries, 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,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Social Security Trust

5 Funds Management Act of 1999’’.
2

•S633 IS

1 SEC. 2. INVESTMENT OF THE FEDERAL OLD-AGE AND SUR2 VIVORS INSURANCE TRUST FUND AND THE

3 FEDERAL DISABILITY INSURANCE TRUST

4 FUND.

5 (a) IN GENERAL.—Section 201(d) of the Social Secu6 rity Act (42 U.S.C. 401(d)) is amended to read as follows:

7 ‘‘(d)(1) Subject to paragraphs (2) and (3), it shall

8 be the duty of the Managing Trustee to invest such por9 tion of the Trust Funds as is not, in the judgment of the

10 Trustee, required to meet current withdrawals. The Man11 aging Trustee may purchase interest-bearing obligations

12 of the United States or obligations guaranteed as to both

13 principal and interest by the United States, on original

14 issue or at the market price.

15 ‘‘(2)(A) If the Managing Trustee, after consultation

16 with the Commissioner of Social Security, determines that

17 the purchase of obligations issued in accordance with

18 paragraph (4) is in the best interest of paying current and

19 future benefits under this title, and will not jeopardize the

20 payment of such benefits, the Managing Trustee may pur21 chase such obligations.

22 ‘‘(B) If the Commissioner of Social Security does not

23 concur with the investment decisions of the Managing

24 Trustee, or believes that other investment strategies are

25 appropriate, the Commissioner shall promptly so inform

26 the President and Congress in writing.
3

•S633 IS

1 ‘‘(3) In investing contributions made to the Trust

2 Funds, the Managing Trustee may not invest such con3 tributions in private financial markets. Neither the Man4 aging Trustee nor any other officer or employee of the

5 Federal Government shall direct private pension plans as

6 to what type of investments to make or in which financial

7 markets to invest.

8 ‘‘(4) The purposes for which obligations of the United

9 States may be issued under chapter 31 of title 31, United

10 States Code, are hereby extended to authorize the issuance

11 at par of public-debt obligations for purchase by the Trust

12 Funds. Such obligations issued for purchase by the Trust

13 Funds shall have maturities fixed with due regard for the

14 needs of the Trust Funds and shall bear interest at a rate

15 equal to the average market yield (computed by the Man16 aging Trustee on the basis of market quotations as of the

17 end of the calendar month next preceding the date of such

18 issue) on all marketable interest-bearing obligations of the

19 United States then forming a part of the public debt which

20 are not due or callable until after the expiration of four

21 years from the end of such calendar month; except that

22 where such average market yield is not a multiple of one23 eighth of 1 percent, the rate of interest of such obligations

24 shall be the multiple of one-eighth of 1 percent nearest

25 such market yield. Each obligation issued for purchase by
4

•S633 IS

1 the Trust Funds under this subsection shall be evidenced

2 by a paper instrument in the form of a bond, note, or

3 certificate of indebtedness issued by the Secretary of the

4 Treasury setting forth the principal amount, date of matu5 rity, and interest rate of the obligation, and stating on

6 its face that the obligation shall be incontestable in the

7 hands of the Trust Fund to which it is issued, that the

8 obligation is supported by the full faith and credit of the

9 United States, and that the United States is pledged to

10 the payment of the obligation with respect to both prin11 cipal and interest.’’.

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

13 subsection (a) shall take effect on the date of enactment

14 of this Act.

15 SEC. 3. INFORMATION REQUIREMENTS FOR SOCIAL SECU16 RITY ACCOUNT STATEMENTS.

17 (a) IN GENERAL.—Section 1143(a) of the Social Se18 curity Act (42 U.S.C. 1320b–13(a)) is amended—

19 (1) in paragraph (2)—

20 (A) in subparagraph (B), by inserting ‘‘,

21 including a separate estimate of the amount of

22 interest earned on the contributions,’’ after

23 ‘‘disability insurance’’;

24 (B) in subparagraph (C)—
5

•S633 IS

1 (i) by inserting ‘‘, including a separate

2 estimate of the amount of interest earned

3 on the contributions,’’ after ‘‘hospital in4 surance’’; and

5 (ii) by striking ‘‘and’’ after the semi6 colon;

7 (C) in subparagraph (D), by striking the

8 period at the end and inserting a semicolon;

9 (D) by redesignating subparagraphs (A),

10 (B), (C), and (D) as subparagraphs (B), (C),

11 (D), and (E), respectively;

12 (E) by inserting after the matter preceding

13 subparagraph (B), as redesignated by subpara14 graph (D), the following:

15 ‘‘(A) the name, age, gender, mailing address,

16 and marital status of the eligible individual;’’;

17 (F) by adding at the end the following:

18 ‘‘(F) the total amount of the employer and em19 ployee contributions for the eligible individual for

20 old-age and survivors insurance benefits, as of the

21 end of the month preceding the date of the state22 ment, in both actual dollars and dollars adjusted for

23 inflation;

24 ‘‘(G) the projected value of—
6

•S633 IS

1 ‘‘(i) the aggregate amount of the employer

2 and employee contributions for old-age and sur3 vivors insurance benefits that are expected to be

4 made by or on behalf of the individual prior to

5 the individual attaining retirement age, in both

6 actual dollars and dollars adjusted for inflation;

7 ‘‘(ii) the annual amount of old-age and

8 survivors insurance benefits that are expected

9 to be payable on the eligible individual’s ac10 count for a single individual and for a married

11 couple, in dollars adjusted for inflation;

12 ‘‘(iii) the total amount of old-age and sur13 vivors insurance benefits payable on the eligible

14 individual’s account for the individual’s life ex15 pectancy, in dollars adjusted for inflation,

16 identifying—

17 ‘‘(I) the life expectancy assumed;

18 ‘‘(II) the amount of benefits received

19 on the basis of each $1 of contributions

20 made by or on behalf of the individual; and

21 ‘‘(III) the projected annual rate of re22 turn for the individual, taking into account

23 the date on which the contributions are

24 made in the eligible individual’s account
7

•S633 IS

1 and the date on which the benefits are

2 paid;

3 ‘‘(iv) the total amount of old-age and sur4 vivors insurance benefits that would have accu5 mulated on the eligible individual’s account on

6 the date on which the individual attains retire7 ment age if the contributions for such indi8 vidual had been invested in Treasury 10-year

9 saving bonds at the prevailing interest rate for

10 such bonds as of the end of the month pre11 ceding the date of the statement, and, alter12 natively, in the Standard and Poor’s 500, or an

13 equivalent portfolio of common stock equities

14 that are based on a broad index of United

15 States market performance, in dollars adjusted

16 for inflation, identifying—

17 ‘‘(I) the date of retirement assumed;

18 ‘‘(II) the interest rate used for the

19 projection; and

20 ‘‘(III) the amount that would be re21 ceived on the basis of each $1 of contribu22 tions made by or on behalf of the indi23 vidual;
8

•S633 IS

1 ‘‘(H) the average annual rate of return, ad2 justed for inflation, on the Treasury 10-year saving

3 bond as of the date of the statement;

4 ‘‘(I) the average annual rate of return, adjusted

5 for inflation, on the Standard and Poor’s 500, or an

6 equivalent portfolio of common stock equities that

7 are based on a broad index of United States market

8 performance, for the preceding 25 years;

9 ‘‘(J) a brief statement that identifies—

10 ‘‘(i) the balance of the trust fund accounts

11 as of the end of the month preceding the date

12 of the statement;

13 ‘‘(ii) the annual estimated balance of the

14 trust fund accounts for each of the succeeding

15 30 years; and

16 ‘‘(iii) the assumptions used to provide the

17 information described in clauses (i) and (ii), in18 cluding the rates of return and the nature of

19 the investments of such trust fund accounts;

20 and

21 ‘‘(K) a simple 1-page summary and comparison

22 of the information that is provided to an eligible in23 dividual under subparagraphs (G), (H), and (I).’’;

24 and
9

•S633 IS

1 (2) by striking paragraph (3) and inserting the

2 following:

3 ‘‘(3) The estimated amounts required to be provided

4 in a statement under this section shall be determined by

5 the Commissioner using a general methodology for making

6 such estimates, as formulated and published at the begin7 ning of each calendar year by the Board of Trustees of

8 the trust fund accounts. A description of the general meth9 odology used shall be provided to the eligible individual

10 as part of the statement required under this section.

11 ‘‘(4) The Commissioner of Social Security shall notify

12 an individual who receives a social security account state13 ment under this section that the individual may request

14 that the information described in paragraph (2) be deter15 mined on the basis of relevant information provided by the

16 individual, including information regarding the individ17 ual’s future income, marital status, date of retirement, or

18 race.

19 ‘‘(5) For purposes of this section—

20 ‘‘(A) the term ‘dollars adjusted for inflation’

21 means—

22 ‘‘(i) dollars in constant or real value terms

23 on the date on which the statement is issued;

24 and
10

•S633 IS

1 ‘‘(ii) an amount that is adjusted on the

2 basis of the Consumer Price Index.

3 ‘‘(B) the term ‘eligible individual’ means an in4 dividual who—

5 ‘‘(i) has a social security account number;

6 ‘‘(ii) has attained age 25 or over; and

7 ‘‘(iii) has wages or net earnings from self8 employment; and

9 ‘‘(C) the term ‘trust fund account’ means—

10 ‘‘(i) the Federal Old-Age and Survivors In11 surance Trust Fund; and

12 ‘‘(ii) the Federal Disability Insurance

13 Trust Fund.’’.

14 (b) MANDATORY PROVISION OF STATEMENTS

15 THROUGH MEANS SUCH AS THE INTERNET.—Section

16 1143(c)(2) of the Social Security Act (42 U.S.C. 1320b–

17 13(c)(2)) is amended—

18 (1) in the first sentence, by inserting ‘‘(which

19 shall include the Internet as soon as the Commis20 sioner of Social Security determines that adequate

21 measures are in place to protect the confidentiality

22 of the information contained in the statement)’’ be23 fore the period; and

24 (2) by striking the second and third sentences.
11

•S633 IS

1 (c) TECHNICAL AMENDMENT.—Section 1143 of the

2 Social Security Act (42 U.S.C. 1320b–13) is amended by

3 striking ‘‘Secretary’’ each place it appears and inserting

4 ‘‘Commissioner of Social Security’’.

5 (d) EFFECTIVE DATE.—The amendments made by

6 this Act shall apply to statements provided for fiscal years

7 beginning with fiscal year 2000.

Æ