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105TH CONGRESS

1ST SESSION S. 1145

To amend the Social Security Act to provide simplified and accurate information on the social security trust funds, and personal earnings and benefit

estimates to eligible individuals.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 3, 1997

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

to the Committee on Finance

A BILL

To amend the Social Security Act to provide simplified and

accurate information on the social security trust funds,

and personal earnings and benefit estimates to eligible

individuals.

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 ‘‘Social Security Informa5 tion Act of 1997’’.

6 SEC. 2. FINDINGS.

7 Congress finds that—
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1 (1) information regarding the solvency of the

2 social security trust funds, and personal earnings

3 and benefits estimates is vital for working Ameri4 cans to plan a financially secure retirement;

5 (2) over the next 35 years, the number of

6 American people age 65 and older will double, while

7 the number of people age 20 to 64 will increase by

8 only 20 percent, and these demographic changes will

9 have a significant impact on the future of the social

10 security system;

11 (3) simplified and accurate information regard12 ing the social security system is needed to enable

13 working Americans to understand and adjust to

14 those demographic changes;

15 (4) more than 50 percent of the workers in the

16 United States do not have a pension and that per17 centage is increasing for younger age groups, 50

18 percent of families in the United States have less

19 than $1,000 in net financial assets, and the median

20 amount of savings among adults who are in their

21 late 50s, the age of a worker facing immediate re22 tirement, is still less than $10,000;

23 (5) lack of information has, in part, caused

24 poor financial planning for future retirement, result25 ing in insufficient savings;
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1 (6) the General Accounting Office reports that

2 the Personal Earnings and Benefits Estimate State3 ments (PEBES) initiative is an important step to4 wards better informing the public about the pro5 grams and benefits under the social security system,

6 but extensive revisions to the PEBES are needed to

7 ensure better understanding of that system and ef8 fective communication to the general public about

9 that system; and

10 (7) public awareness of the long-term financial

11 soundness of the social security system will facilitate

12 necessary reform of that system and increase public

13 confidence in the system.

14 SEC. 3. PURPOSES.

15 The purposes of this Act are—

16 (1) to require the Commissioner of Social Secu17 rity to provide simple and accurate information on

18 the fiscal status of the social security trust funds

19 and on the personal earnings and benefits estimates

20 of all eligible individuals in order to allow working

21 Americans to better plan their retirement;

22 (2) to prohibit the use of any message or design

23 relating to such information that may mislead or

24 confuse the general public; and
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1 (3) to build public confidence in the social secu2 rity system through the requirement of full disclo3 sure and increased awareness of the fiscal soundness

4 of the system.

5 SEC. 4. INFORMATION REQUIREMENTS FOR STATEMENTS.

6 (a) INFORMATION REQUIREMENTS FOR SOCIAL SE7 CURITY ACCOUNT STATEMENT.—Section 1143(a) of the

8 Social Security Act (42 U.S.C. 1320b–13(a)) is amend9 ed—

10 (1) in paragraph (2)—

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

12 including a separate estimate of the amount of

13 interest earned on the contributions,’’ after

14 ‘‘disability insurance’’;

15 (B) in subparagraph (C)—

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

17 estimate of the amount of interest earned

18 on the contributions,’’ after ‘‘hospital in19 surance’’; and

20 (ii) by striking ‘‘and’’ after the semi21 colon;

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

23 period at the end and inserting a semicolon;
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1 (D) by redesignating subparagraphs (A),

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

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

4 (E) by inserting after the matter preceding

5 subparagraph (B), as redesignated by subpara6 graph (D), the following:

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

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

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

10 ‘‘(F) the total amount of the employer and em11 ployee contributions for the eligible individual for

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

13 end of the month preceding the date of the state14 ment, in both actual dollars and dollars adjusted for

15 inflation;

16 ‘‘(G) the projected value of—

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

18 and employee contributions for old-age and sur19 vivors insurance benefits that are expected to be

20 made by or on behalf of the individual prior to

21 the individual attaining retirement age, in both

22 actual dollars and dollars adjusted for inflation;

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

24 survivors insurance benefits that are expected

25 to be payable on the eligible individual’s ac-
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1 count for a single individual and for a married

2 couple, in dollars adjusted for inflation;

3 ‘‘(iii) the total amount of old-age and sur4 vivors insurance benefits payable on the eligible

5 individual’s account for the individual’s life ex6 pectancy, in dollars adjusted for inflation, iden7 tifying—

8 ‘‘(I) the life expectancy assumed;

9 ‘‘(II) the amount of benefits received

10 on the basis of each $1 of contributions

11 made by or on behalf of the individual; and

12 ‘‘(III) the projected annual rate of re13 turn for the individual, taking into account

14 the date on which the contributions are

15 made in the eligible individual’s account

16 and the date on which the benefits are

17 paid;

18 ‘‘(iv) the total amount of old-age and sur19 vivors insurance benefits that would have accu20 mulated on the eligible individual’s account on

21 the date on which the individual attains retire22 ment age if the contributions for such individ23 ual had been invested in Treasury 10-year sav24 ing bonds at the prevailing interest rate for

25 such bonds as of the end of the month preced-
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1 ing the date of the statement, in dollars ad2 justed for inflation, identifying—

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

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

5 projection; and

6 ‘‘(III) the amount that would be re7 ceived on the basis of each $1 of contribu8 tions made by or on behalf of the individ9 ual;

10 ‘‘(H) the average annual rate of return, ad11 justed for inflation, on the Treasury 10-year saving

12 bond as of the date of the statement;

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

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

15 equivalent portfolio of common stock equities that

16 are based on a broad index of United States market

17 performance, for the preceding 25 years;

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

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

20 as of the end of the month preceding the date

21 of the statement;

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

23 trust fund accounts for each of the succeeding

24 30 years; and
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1 ‘‘(iii) the assumptions used to provide the

2 information described in clauses (i) and (ii), in3 cluding the rates of return and the nature of

4 the investments of such trust fund accounts;

5 and

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

7 of the information that is provided to an eligible in8 dividual under subparagraphs (G), (H), and (I).’’;

9 and

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

11 following:

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

13 in a statement under this section shall be determined by

14 the Commissioner using a general methodology for making

15 such estimates, as formulated and published at the begin16 ning of each calendar year by the Board of Trustees of

17 the trust fund accounts. A description of the general meth18 odology used shall be provided to the eligible individual

19 as part of the statement required under this section.

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

21 an individual who receives a social security account state22 ment under this section that the individual may request

23 that the information described in paragraph (2) be deter24 mined on the basis of relevant information provided by the

25 individual, including information regarding the individ-
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1 ual’s future income, marital status, date of retirement, or

2 race.

3 ‘‘(5) For purposes of this section—

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

5 means—

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

7 on the date on which the statement is issued;

8 and

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

10 basis of the Consumer Price Index.

11 ‘‘(B) the term ‘eligible individual’ means an in12 dividual who—

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

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

15 ‘‘(iii) has wages or net earnings from self16 employment; and

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

18 ‘‘(i) the Federal Old-Age and Survivors In19 surance Trust Fund; and

20 ‘‘(ii) the Federal Disability Insurance

21 Trust Fund.’’.

22 (b) MANDATORY PROVISION OF STATEMENTS.—Sec23 tion 1143(c)(2) of the Social Security Act (42 U.S.C.

24 1320b–13(c)(2)) is amended by striking ‘‘With respect to’’

25 and all that follows.
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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 after the date of enactment of this Act.

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