I 

108TH CONGRESS 

2D SESSION H. R. 4851

To reform Social Security by establishing a Personal Social Security Savings 

Program. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 19, 2004

Mr. RYAN of Wisconsin (for himself, Mr. DOOLITTLE, and Mr. FRANKS of Arizona) introduced the following bill; which was referred to the Committee 

on Ways and Means, and in addition to the Committees on the Budget 

and Rules, for a period to be subsequently determined by the Speaker, 

in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL

To reform Social Security by establishing a Personal Social 

Security Savings 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 AND TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Social Security Personal Savings Guarantee and Pros6 perity Act of 2004’’. 

7 (b) TABLE OF CONTENTS.—The table of contents is 

8 as follows:
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Sec. 1. Short title and table of contents. 

Sec. 2. Establishment of Personal Social Security Investment Program. 

‘‘PART A—INSURANCE BENEFITS

‘‘PART B—PERSONAL SOCIAL SECURITY SAVINGS PROGRAM

‘‘Sec. 251. Definitions. 

‘‘Sec. 252. Social Security Personal Savings Fund. 

‘‘Sec. 253. Participation in Program. 

‘‘Sec. 254. Personal social security savings accounts. 

‘‘Sec. 255. Benefit credit certificates. 

‘‘Sec. 256. Tier I Investment Fund. 

‘‘Sec. 257. Tier II Investment Fund. 

‘‘Sec. 258. Tier III Investment Options. 

‘‘Sec. 259. Personal social security savings annuity and other distributions. 

‘‘Sec. 260. Guarantee of promised benefits. 

‘‘Sec. 261. Personal Social Security Savings Account Board. 

‘‘Sec. 262. Executive Director. 

Sec. 3. Adjustments to primary insurance amounts. 

Sec. 4. General fund transfers to the Federal Old-Age and Survivors Insurance 

Trust Fund. 

Sec. 5. Tax treatment of accounts. 

Sec. 6. Self-Liquidating Social Security Transition Fund. 

Sec. 7. Issuance of Transition Fund Bonds. 

Sec. 8. Accounting for the Old-Age, Survivors, and Disability Insurance Program and the Personal Social Security Savings Program. 

Sec. 9. Budgetary treatment of social security. 

Sec. 10. Dedication of budget surpluses to saving social security. 

Sec. 11. National spending limitation. 

Sec. 12. Imposition of spending limitations on congressional budget resolutions. 

Sec. 13. Reduction of FICA rates resulting from Personal Social Security Savings Program.

1 SEC. 2. ESTABLISHMENT OF PERSONAL SOCIAL SECURITY 

2 INVESTMENT PROGRAM. 

3 (a) IN GENERAL.—Title II of the Social Security Act 

4 is amended—

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

7 ‘‘PART A—INSURANCE BENEFITS’’; and 

8 (2) by adding at the end the following new part: 
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1 ‘‘PART B—PERSONAL SOCIAL SECURITY SAVINGS 

2 PROGRAM 

3 ‘‘SEC. 251. DEFINITIONS. 

4 ‘‘For purposes of this part—

5 ‘‘(1) PARTICIPATING INDIVIDUAL.—The term 

6 ‘participating individual’ has the meaning provided 

7 in section 253(a). 

8 ‘‘(2) BOARD.—The term ‘Board’ means the 

9 Personal Social Security Savings Account Board es10 tablished under section 261. 

11 ‘‘(3) EXECUTIVE DIRECTOR.—The term ‘Execu12 tive Director’ means the Executive Director ap13 pointed under section 262. 

14 ‘‘(4) PERSONAL SOCIAL SECURITY SAVINGS AC15 COUNT.—The term ‘personal social security savings 

16 account’ means an account established under section 

17 254(a). 

18 ‘‘(5) PERSONAL SOCIAL SECURITY SAVINGS AN19 NUITY.—The term ‘personal social security savings 

20 annuity’ means an annuity approved by the Board 

21 under section 259(b)(3). 

22 ‘‘(6) SAVINGS FUND.—The term ‘Savings Fund’ 

23 means the Social Security Personal Savings Fund 

24 established under section 252. 
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1 ‘‘(7) TIER I INVESTMENT FUND.—The term 

2 ‘Tier I Investment Fund’ means the trust fund cre3 ated under section 256. 

4 ‘‘(8) TIER II INVESTMENT FUND.—The term 

5 ‘Tier II Investment Fund’ means the trust fund cre6 ated under section 257. 

7 ‘‘(9) TIER III INVESTMENT OPTION.—The term 

8 ‘Tier III Investment Option’ means an investment 

9 option which is—

10 ‘‘(A) offered by an eligible entity certified 

11 by the Board under section 258(b); and 

12 ‘‘(B) approved by the Board under section 

13 258(c). 

14 ‘‘SEC. 252. SOCIAL SECURITY PERSONAL SAVINGS FUND. 

15 ‘‘(a) ESTABLISHMENT OF SAVINGS FUND.—

16 ‘‘(1) ESTABLISHMENT.—There is established in 

17 the Treasury of the United States a trust fund to 

18 be known as the ‘Social Security Personal Savings 

19 Fund’. 

20 ‘‘(2) AMOUNTS IN FUND.—The Savings Fund 

21 shall consist of all amounts transferred to or depos22 ited into the Savings Fund under subsection (b), in23 creased by the total net earnings from investments 

24 of sums in the Savings Fund and reduced by the 
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1 total net losses from investments of the Savings 

2 Fund. 

3 ‘‘(3) TRUSTEES.—The Board shall serve as 

4 trustees of the Savings Fund. 

5 ‘‘(4) BUDGET AUTHORITY; APPROPRIATION.—

6 This part constitutes budget authority in advance of 

7 appropriations Acts and represents the obligation of 

8 the Board to provide for the payment of amounts 

9 provided under this part. The amounts held in the 

10 Savings Fund are appropriated and shall remain 

11 available without fiscal year limitation. 

12 ‘‘(b) DEPOSITS INTO FUND.—

13 ‘‘(1) IN GENERAL.—During each calendar year, 

14 the Secretary of the Treasury shall deposit into the 

15 Savings Fund, from amounts held in the Federal 

16 Old-Age and Survivors Insurance Trust Fund, a 

17 total amount equal, in the aggregate, to 100 percent 

18 of the redirected social security contribution for such 

19 calendar year of each individual who is a partici20 pating individual for such calendar year. 

21 ‘‘(2) TRANSFERS BASED ON ESTIMATES.—

22 ‘‘(A) IN GENERAL.—The amounts depos23 ited pursuant to paragraph (1) shall be trans24 ferred in at least weekly payments from the 
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1 Federal Old-Age and Survivors Insurance Trust 

2 Fund to the Savings Fund. 

3 ‘‘(B) DETERMINATION OF AMOUNTS.—The 

4 amounts transferred under subparagraph (A) 

5 shall be determined on the basis of estimates, 

6 made by the Commissioner of Social Security 

7 and certified to the Secretary of the Treasury, 

8 of the wages paid to, and self-employment in9 come derived by, participating individuals. 

10 Proper adjustments shall be made in amounts 

11 subsequently transferred to the extent prior es12 timates were in excess of or were less than ac13 tual amounts transferred. 

14 ‘‘(3) REDIRECTED SOCIAL SECURITY CONTRIBU15 TIONS.—For purposes of paragraph (1)——

16 ‘‘(A) IN GENERAL.—The term ‘redirected 

17 social security contributions’ means, with re18 spect to an individual for a calendar year, the 

19 sum of—

20 ‘‘(i) the product derived by multi21 plying—

22 ‘‘(I) the sum of the total wages 

23 paid to, and self-employment income 

24 derived by, such individual during 

25 such calendar year, to the extent such 
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1 total wages and self-employment in2 come do not exceed the base amount 

3 for such calendar year; by 

4 ‘‘(II) 10 percent; and 

5 ‘‘(ii) the product derived by multi6 plying—

7 ‘‘(I) the sum of the total wages 

8 paid to, and self-employment income 

9 derived by, such individual during 

10 such calendar year, to the extent such 

11 total wages and self-employment in12 come exceed the base amount (taking 

13 into account the limits imposed by the 

14 contribution and benefit base under 

15 section 230); by 

16 ‘‘(II) 5 percent. 

17 ‘‘(B) BASE AMOUNT.—For purposes of 

18 subparagraph (A)—

19 ‘‘(i) INITIAL BASE AMOUNT.—The 

20 base amount for calendar year 2005 is 

21 $10,000. 

22 ‘‘(ii) ADJUSTMENTS TO BASE

23 AMOUNT.—The base amount for any cal24 endar year after 2005 is the product de-
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1 rived by multiplying $10,000 by a frac2 tion—

3 ‘‘(I) the numerator of which is 

4 the national average wage index (as 

5 defined in section 209(k)) for the first 

6 of the 2 preceding calendar years; and 

7 ‘‘(II) the denominator of which is 

8 the national average wage index (as so 

9 defined) for 2003. 

10 ‘‘(c) AVAILABILITY.—The sums in the Savings Fund 

11 are appropriated and shall remain available without fiscal 

12 year limitation—

13 ‘‘(1) to invest funds in the Tier I Investment 

14 Fund of the Savings Fund and the Tier II Invest15 ment Fund of the Savings Fund under sections 256 

16 and 257, respectively; 

17 ‘‘(2) to transfer into Tier III Investment Op18 tions under section 258; 

19 ‘‘(3) to make distributions in accordance with 

20 section 259; and 

21 ‘‘(4) to pay the administrative expenses of the 

22 Board in accordance with subsection (e). 

23 ‘‘(d) LIMITATIONS ON USE OF FUNDS.—

24 ‘‘(1) IN GENERAL.—Sums in the Savings Fund 

25 credited to a participating individual’s personal so-
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1 cial security savings account may not be used for, or 

2 diverted to, purposes other than for the exclusive 

3 benefit of the participating individual or the partici4 pating individual’s beneficiaries under this part. 

5 ‘‘(2) ASSIGNMENTS.—Sums in the Savings 

6 Fund may not be assigned or alienated and are not 

7 subject to execution, levy, attachment, garnishment, 

8 or other legal process. 

9 ‘‘(e) PAYMENT OF ADMINISTRATIVE EXPENSES.—

10 Administrative expenses incurred to carry out this part 

11 shall be paid out of net earnings in the Savings Fund in 

12 conjunction with the allocation of investment earnings and 

13 losses under section 254(c). 

14 ‘‘(f) LIMITATION.—The sums in the Savings Fund 

15 shall not be appropriated for any purpose other than the 

16 purposes specified in this part and may not be used for 

17 any other purpose. 

18 ‘‘SEC. 253. PARTICIPATION IN PROGRAM. 

19 ‘‘(a) PARTICIPATING INDIVIDUAL.—For purposes of 

20 this part, the term ‘participating individual’ means any 

21 individual—

22 ‘‘(1)(A) who receives wages in any calendar 

23 year after December 31, 2004, on which there is im24 posed a tax under section 3101(a) of the Internal 

25 Revenue Code of 1986, or 
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1 ‘‘(B) who derives self-employment income for a 

2 taxable year beginning after December 31, 2004, on 

3 which there is imposed a tax under section 1401(a) 

4 of the Internal Revenue Code of 1986, 

5 ‘‘(2) who is born on or after January 1, 1950, 

6 and 

7 ‘‘(3) who has not filed an election to renounce 

8 such individual’s status as a participating individual 

9 under subsection (b) or has filed such an election 

10 and has subsequently filed an election to reinstate 

11 such individual’s status as a participating individual 

12 under subsection (c). 

13 ‘‘(b) RENUNCIATION OF PARTICIPATION.—

14 ‘‘(1) IN GENERAL.—An individual—

15 ‘‘(A) who has not attained retirement age 

16 (as defined in section 216(l)(1)), and 

17 ‘‘(B) with respect to whom no distribution 

18 has been made from amounts credited to the in19 dividual’s personal social security savings ac20 count for the purchase of a personal social se21 curity savings annuity, 

22 may elect, in such form and manner as shall be pre23 scribed in regulations of the Board, to renounce 

24 such individual’s status as a ‘participating indi25 vidual’ for purposes of this part. Upon completion of 
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1 the procedures provided for under paragraph (2), 

2 any such individual who has made such an election 

3 shall not be treated as a participating individual 

4 under this part, effective as if such individual had 

5 never been a participating individual. The Board 

6 shall provide for immediate notification of such elec7 tion to the Commissioner of Social Security, the Sec8 retary of the Treasury, and the Executive Director. 

9 ‘‘(2) PROCEDURE.—The Board shall prescribe 

10 by regulation procedures governing the termination 

11 of an individual’s status as ‘participating individual’ 

12 pursuant to an election under this subsection. Such 

13 procedures shall include—

14 ‘‘(A) prompt closing of the individual’s per15 sonal social security savings account established 

16 under section 254, 

17 ‘‘(B) revocation of any benefit credit cer18 tificate assigned to the individual’s personal so19 cial security savings account under section 255, 

20 and 

21 ‘‘(C) prompt transfer to the Federal Old22 Age and Survivors Insurance Trust Fund as 

23 general receipts of any amount held in the Tier 

24 II Investment Fund of the Savings Fund or 

25 under a Tier III Investment Option pursuant to 
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1 section 257 or 258 and credited to such individ2 ual’s personal social security savings account. 

3 ‘‘(c) REINSTATEMENT OF PARTICIPATION.—

4 ‘‘(1) IN GENERAL.—Any individual who has 

5 filed an election under subsection (b) to renounce 

6 such individual’s status as a ‘participating indi7 vidual’ under this part may elect, in such form and 

8 manner as shall be prescribed in regulations of the 

9 Board, to reinstate such status. Such regulations 

10 shall provide for regular, periodic opportunities for 

11 the filing of such an election. The Board shall pro12 vide for immediate notification to the Commissioner 

13 of Social Security, the Secretary of the Treasury, 

14 and the Executive Director of such election. 

15 ‘‘(2) EFFECTIVENESS OF REINSTATEMENT.—

16 An election under this subsection shall be effective 

17 with respect to wages earned, and self-employment 

18 income derived, on the earliest date on which the 

19 Board determines is practicable to make such elec20 tion effective following the date of the filing of the 

21 election. The individual filing the election shall be 

22 treated as becoming a participating individual under 

23 this part on the effective date of the election as if 

24 such individual first met the requirements of sub25 section (a) on such date. 
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1 ‘‘(3) IRREVOCABILITY.—An election under this 

2 subsection shall be irrevocable. 

3 ‘‘SEC. 254. PERSONAL SOCIAL SECURITY SAVINGS AC4 COUNTS. 

5 ‘‘(a) ESTABLISHMENT OF PUBLICLY ADMINISTERED

6 SYSTEM OF PERSONAL SECURITY SAVINGS ACCOUNTS.—

7 As soon as practicable after the later of January 1, 2005, 

8 or the date on which an individual becomes a participating 

9 individual under this part, the Executive Director shall es10 tablish a personal social security savings account for such 

11 individual. Such account shall be the means by which 

12 amounts held in the Tier I Investment Fund and the Tier 

13 II Investment Fund of the Savings Fund under sections 

14 256 and 257 and amounts held under Tier III Investment 

15 Options under section 258 are credited to such individual, 

16 under procedures which shall be established by the Board 

17 by regulation. Each account of a participating individual 

18 shall be identified to such participating individual by 

19 means of the participating individual’s social security ac20 count number. 

21 ‘‘(b) ACCOUNT BALANCE.—The balance in a partici22 pating individual’s account at any time is the sum of—

23 ‘‘(1) the balance in the Tier I Investment Fund 

24 of the Savings Fund credited to such participating 

25 individual prior to transfer of the credited amount to 
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1 the Tier II Investment Fund of the Savings Fund; 

2 plus 

3 ‘‘(2) the excess of—

4 ‘‘(A) all deposits in the Tier II Investment 

5 Fund of the Savings Fund credited to such par6 ticipating individual’s personal social security 

7 savings account, subject to such increases and 

8 reductions as may result from allocations made 

9 to and reductions made in the account pursuant 

10 to subsection (c)(1); over 

11 ‘‘(B) amounts paid out of the Tier II In12 vestment Fund in connection with amounts 

13 credited to such participating individual’s per14 sonal social security savings account; plus 

15 ‘‘(3) the excess of—

16 ‘‘(A) the deposits in the Tier III Invest17 ment Options credited to such participating in18 dividual’s personal social security savings ac19 count, subject to such increases and reductions 

20 as may result from amounts credited to, and re21 ductions made in, the account pursuant to sub22 section (c)(2); over 

23 ‘‘(B) amounts paid out of the Tier III In24 vestment Options of such participating indi25 vidual. 
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1 The calculation made under paragraph (3) shall be made 

2 separately for each Tier III Investment Option of the par3 ticipating individual. The Board shall also hold for the 

4 participating individual any benefit credit certificate as5 signed to the participating individual’s personal social se6 curity savings account under section 255. 

7 ‘‘(c) ALLOCATION OF EARNINGS AND LOSSES.—Pur8 suant to regulations which shall be prescribed by the 

9 Board, the Executive Director shall allocate to each per10 sonal social security savings account an amount equal to 

11 the net earnings and net losses from each investment of 

12 sums—

13 ‘‘(1) in the Tier I Investment Fund and the 

14 Tier II Investment Fund which are attributable to 

15 sums credited to such account reduced by an appro16 priate share of the administrative expenses paid out 

17 of the net earnings, as determined by the Executive 

18 Director; and 

19 ‘‘(2) in the Tier III Investment Options which 

20 are attributable to sums credited to such account re21 duced by the administrative expenses paid out of the 

22 net earnings. 

23 ‘‘SEC. 255. BENEFIT CREDIT CERTIFICATES. 

24 ‘‘(a) IN GENERAL.—As soon as is practicable after 

25 a personal social security savings account is established 
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1 under this part with respect to any participating indi2 vidual, the Board shall certify the establishment of such 

3 account to the Secretary of the Treasury, and, upon re4 ceipt of such certification, such Secretary shall assign to 

5 the account of such individual a benefit credit certificate. 

6 The benefit credit certificate shall be evidenced by a paper 

7 instrument provided to the participating individual setting 

8 forth the terms specified in this section, and stating on 

9 its face that the certificate shall be incontestable in the 

10 hands of the bearer, that the certificate is supported by 

11 the full faith and credit of the United States, and that 

12 the United States is pledged to the satisfaction of the 

13 terms of the certificate as provided in this section. 

14 ‘‘(b) VALUE.—

15 ‘‘(1) FACE VALUE.—The benefit credit certifi16 cate shall have an initial face value equal to the total 

17 estimated actuarial present value of the future 

18 monthly insurance benefits under section 202 to 

19 which the participating individual would be entitled, 

20 and to which other individuals would be entitled 

21 under section 202 based on the participating individ22 ual’s wages and self-employment income, payable on 

23 or after the date on which such individual becomes 

24 entitled to old-age insurance benefits under section 

25 202(a) (or the date of such individual’s death, if ear-
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1 lier) determined under current law as in effect on 

2 the date of the determination, using the assumptions 

3 provided under paragraph (2) and taking into ac4 count the reduction in the participating individual’s 

5 primary insurance amount under section 215(j). 

6 ‘‘(2) ASSUMPTIONS.—The actuarial present 

7 value determined under paragraph (1) shall be de8 termined—

9 ‘‘(A) taking into account solely wages and 

10 self-employment income credited to the partici11 pating individual as of the date of the deter12 mination (including any amounts creditable to 

13 such individual as of such date but not yet 

14 credited as of such date, as estimated in accord15 ance with regulations which shall be prescribed 

16 by the Board), 

17 ‘‘(B) assuming that the participating indi18 vidual would become entitled to old-age insur19 ance benefits under section 202(a) on the day 

20 such individual would attain retirement age (as 

21 defined in section 216(l)(1)), and 

22 ‘‘(C) using reasonable actuarial and eco23 nomic assumptions concerning mortality rates, 

24 discount rates, wage growth, and other relevant 

25 factors. 
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1 ‘‘(3) ADJUSTMENT TO VALUE.—Not less than 

2 annually, the Board shall update the face value of 

3 the benefit credit certificate to reflect any changes in 

4 the total estimated actuarial present value of the fu5 ture monthly benefits described in paragraph (1), as 

6 determined under this subsection as of the date of 

7 the update. 

8 ‘‘(c) REDEMPTION.—Redemption of a benefit credit 

9 certificate assigned to a participating individual’s personal 

10 social security savings account shall be obtained only by 

11 means of the receipt of benefits under section 202 by indi12 viduals entitled to such benefits under part A, based on 

13 the wages and self-employment income of such partici14 pating individual, on or after the date on which the par15 ticipating individual becomes entitled to old-age insurance 

16 benefits under section 202(a) (or the date of such individ17 ual’s death, if earlier), taking into account section 215(j). 

18 Payment of such benefits shall constitute full redemption 

19 of such certificate. 

20 ‘‘SEC. 256. TIER I INVESTMENT FUND. 

21 ‘‘(a) ESTABLISHMENT OF TIER I INVESTMENT

22 FUND.—

23 ‘‘(1) IN GENERAL.—The Savings Fund shall in24 clude a separate fund to be known as the ‘Tier I In25 vestment Fund’. 
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1 ‘‘(2) AMOUNTS IN FUND.—The Tier I Invest2 ment Fund consists of all amounts derived from 

3 payments into the Fund under section 252(b) and 

4 remaining after investment of such amounts under 

5 subsection (b), including additional amounts derived 

6 as income from such investments. 

7 ‘‘(3) USE OF FUNDS.—The amounts held in the 

8 Fund are appropriated and shall remain available 

9 without fiscal year limitation—

10 ‘‘(A) to be held for investment on behalf of 

11 participating individuals under subsection (b), 

12 ‘‘(B) to pay the administrative expenses re13 lated to the Fund, and 

14 ‘‘(C) to make transfers from the Fund 

15 under subsection (c)(2). 

16 ‘‘(b) INVESTMENT OF FUND BALANCE.—For pur17 poses of investment of the Tier I Investment Fund, the 

18 Board shall contract with appropriate professional asset 

19 managers, recordkeepers, and custodians selected for in20 vestment of amounts held in the Fund, so as to provide 

21 for investment of the balance of the Fund, in a manner 

22 providing broad diversification in accordance with regula23 tions of the Board, in—

24 ‘‘(1) insurance contracts, 

25 ‘‘(2) certificates of deposit, or 
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1 ‘‘(3) other instruments or obligations selected 

2 by such asset managers, 

3 which return the amount invested and pay interest, at a 

4 specified rate or rates, on that amount during a specified 

5 period of time. 

6 ‘‘(c) SEPARATE CREDITING TO PERSONAL SOCIAL

7 SECURITY SAVINGS ACCOUNTS AND TRANSFERS TO THE

8 TIER II INVESTMENT FUND OR TO TIER III INVESTMENT

9 OPTIONS.—

10 ‘‘(1) CREDITING TO ACCOUNTS.—

11 ‘‘(A) IN GENERAL.—Subject to this para12 graph, the Board shall provide for prompt, sep13 arate crediting, as soon as practicable, of the 

14 amounts deposited in the Tier I Investment 

15 Fund to the personal social security savings ac16 count of each participating individual with re17 spect to the redirected social security contribu18 tions (as defined in section 252(b)(3)) of such 

19 participating individual. The Board shall in20 clude in such crediting, with respect to each 

21 such individual, any increases or decreases in 

22 such amounts so as to reflect the net returns 

23 and losses from investment of the balance of 

24 the Fund prior to such crediting. For purposes 

25 of determining such increases and decreases for 
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1 each calendar year, the amounts deposited into 

2 the Fund in connection with such individual 

3 during such calendar year shall be deemed to 

4 have been deposited on June 30 of such year. 

5 ‘‘(B) TREATMENT OF MARRIED PARTICI6 PATING INDIVIDUALS.—If the participating in7 dividual is married as of the end of the calendar 

8 year in which the amounts to be credited were 

9 deposited in the Tier I Investment Fund and 

10 the spouse is also a participating individual, the 

11 personal social security savings account of the 

12 participating individual and the personal social 

13 security savings account of his or her spouse 

14 shall each be credited with 50 percent of such 

15 amounts. 

16 ‘‘(2) TRANSFERS FROM THE TIER I INVEST17 MENT FUND.—In accordance with elections filed 

18 with the Board by a participating individual, any 

19 amount credited to the personal social security sav20 ings account of such participating individual under 

21 paragraph (1) shall be promptly transferred to the 

22 Tier II Investment Fund of the Savings Fund for 

23 investment in accordance with section 257 and, to 

24 the extent available under section 258, to Tier III 

25 Investment Options in accordance with section 258. 
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1 ‘‘(d) TREATMENT OF AMOUNTS HELD IN TIER I IN2 VESTMENT FUND.—Subject to this part—

3 ‘‘(1) until amounts deposited into the Tier I In4 vestment Fund during any calendar year are cred5 ited to personal social security savings accounts, 

6 such amounts shall be treated as the unallocated 

7 property of all participating individuals with respect 

8 to whom amounts were deposited in the Fund dur9 ing such year, jointly held in trust for such partici10 pating individuals in the Savings Fund, and 

11 ‘‘(2) amounts deposited into the Fund which 

12 are credited to the personal social security savings 

13 account of a participating individual shall be treated 

14 as property of the participating individual, held in 

15 trust for such participating individual in the Savings 

16 Fund. 

17 ‘‘SEC. 257. TIER II INVESTMENT FUND. 

18 ‘‘(a) ESTABLISHMENT OF TIER II INVESTMENT

19 FUND.—

20 ‘‘(1) IN GENERAL.—The Savings Fund shall in21 clude a separate fund to be known as the ‘Tier II 

22 Investment Fund’. 

23 ‘‘(2) AMOUNTS IN FUND.—The Tier II Invest24 ment Fund consists of all amounts derived from 

25 payments into the Fund under section 256(c)(2) and 
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1 remaining after investment of such amounts under 

2 subsection (b), including additional amounts derived 

3 as income from such investments. 

4 ‘‘(3) USE OF FUNDS.—The amounts held in the 

5 Fund are appropriated and shall remain available 

6 without fiscal year limitation—

7 ‘‘(A) to be held for investment under sub8 section (b), 

9 ‘‘(B) to pay the administrative expenses re10 lated to the Fund, and 

11 ‘‘(C) to make transfers to Tier III Invest12 ment Options under section 258 or to make 

13 payments under section 259. 

14 ‘‘(b) PAYMENTS INTO TIER II INVESTMENT FUND.—

15 ‘‘(1) IN GENERAL.—Upon the crediting under 

16 section 252 to the personal social security savings 

17 account of a participating individual of any amount 

18 held in the Tier I Investment Fund for any calendar 

19 year, the Board shall transfer from the Tier I In20 vestment Fund into the Tier II Investment Fund 

21 any amount so credited to such participating individ22 ual’s account which is not transferred to a Tier III 

23 Investment Option pursuant to an election under 

24 section 258(a). 
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1 ‘‘(2) ONGOING SEPARATE CREDITING.—Subject 

2 to this paragraph, the Board shall provide for ongo3 ing separate crediting to each participating individ4 ual’s personal social security savings account of the 

5 amounts deposited in the Tier II Investment Fund 

6 with respect to such participating individual, to7 gether with any increases or decreases therein so as 

8 to reflect the net returns and losses from investment 

9 thereof while held in the Fund. 

10 ‘‘(c) INVESTMENT IN EQUITIES AND FIXED INCOME

11 INSTRUMENTS IN 3 ALTERNATIVE INVESTMENT AC12 COUNTS.—

13 ‘‘(1) IN GENERAL.—For purposes of investment 

14 of the Tier II Investment Fund, the Board shall di15 vide the Fund into 3 investment accounts. Such ac16 counts shall consist of the 65/35 investment account, 

17 the 50/50 investment account, and the 80/20 invest18 ment account. The Board shall contract with appro19 priate investment managers, recordkeepers, and 

20 custodians selected for investment of amounts held 

21 in each investment account. 

22 ‘‘(2) RULES RELATING TO INVESTMENT AC23 COUNTS.—

24 ‘‘(A) IN GENERAL.—The investment man25 ager, recordkeeper, and custodian selected for 
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1 investment of amounts held in each investment 

2 account referred to paragraph (1) shall invest 

3 such amounts under regulations which shall be 

4 prescribed by the Board so as to ensure, to the 

5 maximum extent practicable, that, of the total 

6 balance in the Fund credited to such account 

7 and available for investment (after allowing for 

8 administrative expenses)—

9 ‘‘(i) the prescribed equities percentage 

10 is invested in equities in accordance with 

11 paragraph (4), and 

12 ‘‘(ii) the prescribed fixed income in13 struments percentage is invested in fixed 

14 income instruments in accordance with 

15 paragraph (5). 

16 ‘‘(B) PRESCRIBED PERCENTAGES.—For 

17 purposes of subparagraph (A)—

18 ‘‘(i) THE 65/35 INVESTMENT AC19 COUNT.—In the case of the 65/35 invest20 ment account—

21 ‘‘(I) the prescribed equities per22 centage is 65 percent, and 

23 ‘‘(II) the prescribed fixed income 

24 instruments percentage is 35 percent. 
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1 ‘‘(ii) THE 50/50 INVESTMENT AC2 COUNT.—In the case of the 50/50 invest3 ment account—

4 ‘‘(I) the prescribed equities per5 centage is 50 percent, and 

6 ‘‘(II) the prescribed fixed income 

7 instruments percentage is 50 percent. 

8 ‘‘(iii) THE 80/20 INVESTMENT AC9 COUNT.—In the case of the 80/20 invest10 ment account—

11 ‘‘(I) the prescribed equities per12 centage is 80 percent, and 

13 ‘‘(II) the prescribed fixed income 

14 instruments percentage is 20 percent. 

15 ‘‘(3) ELECTION OF INVESTMENT OPTIONS.—

16 ‘‘(A) DEFAULT INVESTMENT ACCOUNT.—

17 Except as provided in an election in effect 

18 under subparagraph (B), amounts held in the 

19 Tier II Investment Fund shall be credited to 

20 the 65/35 investment account. 

21 ‘‘(B) ELECTION OF TRANSFERS BETWEEN

22 INVESTMENT ACCOUNTS.—In any case in which 

23 a participating individual who has an amount in 

24 such individual’s personal social security sav25 ings account credited to any of the investment 
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1 accounts in the Tier II Investment Fund files 

2 with the Secretary of the Treasury a written 

3 election under this subparagraph, not more fre4 quently than annually and in accordance with 

5 regulations of the Board, the Secretary of the 

6 Treasury shall transfer the full amount so cred7 ited in such investment account from such in8 vestment account to any one of the other invest9 ment accounts in the Tier II Investment Fund 

10 (whichever is designated in such election). 

11 ‘‘(4) INVESTMENT IN EQUITIES.—In accordance 

12 with regulations which shall be prescribed by the 

13 Board, the Board shall establish standards which 

14 must be met by equities selected for investment of 

15 the balance of the Tier II Investment Fund pursu16 ant to paragraph (2)(A)(i). In conformity with such 

17 standards, the Board shall select, for purposes of 

18 such investment, indices which are comprised of eq19 uities the aggregate market value of which is, in 

20 each case, a reasonably broad representation of com21 panies whose shares are traded on the equity mar22 kets. Amounts invested in equities under an invest23 ment option shall be held in a portfolio designed to 

24 replicate the performance of one or more of such in25 dices. 
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1 ‘‘(5) INVESTMENT IN FIXED INCOME INSTRU2 MENTS.—In accordance with regulations which shall 

3 be prescribed by the Board, the Board shall estab4 lish standards which must be met by fixed income 

5 instruments selected for investment of the balance of 

6 the Tier II Investment Fund pursuant to paragraph 

7 (2)(A)(ii). Such standards shall take into account 

8 the competing considerations of risk and return. 

9 Amounts invested in fixed income instruments in an 

10 investment option shall be held in a portfolio which 

11 shall consist of a diverse range of fixed income in12 struments, taking into full account the opposing con13 siderations of risk and maximization of return. 

14 ‘‘(6) DISCLOSURE OF ADMINISTRATIVE

15 COSTS.—The Executive Director shall provide to 

16 each participating individual an annual disclosure of 

17 the rate of administrative costs chargeable with re18 spect to investment in each investment account in 

19 the Tier II Investment Fund. Such disclosure shall 

20 be written in a manner calculated to be understood 

21 by the average participating individual. 

22 ‘‘(d) ADJUSTMENT OF PRESCRIBED PERCENTAGES

23 AND ALLOWANCE OF ADDITIONAL INVESTMENT AC24 COUNTS.—
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1 ‘‘(1) IN GENERAL.—The Board may from time 

2 to time, as determined by regulation as appropriate 

3 to further the purposes of this section, shall—

4 ‘‘(A) prescribe by regulation adjustments 

5 to the prescribed percentages for each invest6 ment account, 

7 ‘‘(B) establish investment accounts in the 

8 Tier II Investment Fund meeting the require9 ments of this section in addition to those estab10 lished by this section, and 

11 ‘‘(C) terminate investment accounts in the 

12 Tier II Investment Fund. 

13 ‘‘(2) 80 PERCENT LIMIT ON EQUITIES.—No in14 vestment account in the Tier II Investment Fund, 

15 after any exercise of the Board’s authority under 

16 paragraph (1), may be invested otherwise than in a 

17 combination of equities and fixed income invest18 ments or have a prescribed equities percentage of 

19 more than 80 percent. 

20 ‘‘(e) TREATMENT OF AMOUNTS HELD IN TIER II IN21 VESTMENT FUND.—Subject to this part, amounts depos22 ited into, and held and accounted for in, the Tier II In23 vestment Fund with respect to any participating individual 

24 shall continue to be treated as property of such partici-
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1 pating individual, held in trust for such participating indi2 vidual in the Fund. 

3 ‘‘SEC. 258. TIER III INVESTMENT OPTIONS. 

4 ‘‘(a) ELECTION OF TIER III INVESTMENT OP5 TIONS.—

6 ‘‘(1) IN GENERAL.—A participating individual 

7 may elect to direct transfers from amounts in the 

8 Savings Fund credited to the personal social security 

9 savings account of such individual into 1 or more 

10 Tier III Investment Options in accordance with 

11 paragraph (2). 

12 ‘‘(2) COMMENCEMENT OF TIER III INVESTMENT

13 OPTIONS UPON ATTAINMENT OF ELECTION THRESH14 OLD.—In any case in which, as of the end of any 

15 calendar year, the total balance in the Savings Fund 

16 credited to a participating individual’s personal so17 cial security savings account exceeds for the first 

18 time the election threshold, the Board shall, by regu19 lation, provide for an opportunity for such partici20 pating individual to make, at any time thereafter, 

21 such individual’s first election of one or more of the 

22 Tier III Investment Options for investment of an 

23 amount in the Savings Fund credited to such ac24 count. Such election may be in lieu of or in addition 
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•HR 4851 IH 

1 to investment in the options available with respect to 

2 the Tier II Investment Fund of the Savings Fund. 

3 ‘‘(3) ALLOCATION OF FUNDS.—In the case of 

4 an election under paragraph (1), funds credited to 

5 the personal social security savings account of the 

6 participating individual and elected for transfer to 

7 one or more Tier III Investment Options shall be 

8 transferred to the Tier III Investment Options so 

9 elected for such calendar year, in percentages speci10 fied in the election by the participating individual for 

11 each applicable portfolio. 

12 ‘‘(4) ELECTION THRESHOLD.—

13 ‘‘(A) IN GENERAL.—Subject to subpara14 graph (B), for purposes of this subsection the 

15 term ‘election threshold’ means an amount 

16 equal to $7,000. 

17 ‘‘(B) ADJUSTMENTS.—The Board shall ad18 just annually (effective for annual reporting 

19 months occurring after December 2005) the 

20 dollar amount set forth in subparagraph (A) 

21 under procedures providing for adjustments in 

22 the same manner and to the same extent as ad23 justments are provided for under the proce24 dures used to adjust benefit amounts under sec25 tion 215(i)(2)(A), except that any amount so 
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•HR 4851 IH 

1 adjusted that is not a multiple of $1.00 shall be 

2 rounded to the nearest multiple of $1.00. 

3 ‘‘(5) SUBSEQUENT INVESTMENT OF AMOUNTS

4 HELD IN TIER III INVESTMENT OPTIONS.—Any 

5 amounts held in one or more Tier III Investment 

6 Options may be—

7 ‘‘(A) transferred at any time to one or 

8 more other Tier III Investment Options, subject 

9 to applicable regulations of the Board and the 

10 terms governing the affected Tier III Invest11 ment Options, and 

12 ‘‘(B) transferred, not more frequently than 

13 annually, to the Tier II Investment Fund, for 

14 deposit in the applicable investment account 

15 then selected by the participating individual 

16 under section 257. 

17 ‘‘(b) CERTIFICATION OF ELIGIBLE ENTITIES.—

18 ‘‘(1) IN GENERAL.—The Board shall certify eli19 gible entities to offer Tier III Investment Options 

20 under this part. 

21 ‘‘(2) APPLICATION.—Any eligible entity that de22 sires to be certified by the Board to offer a Tier III 

23 Investment Option shall submit an application to the 

24 Board at such time, in such manner, and containing 

25 such information as the Board may require. 
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1 ‘‘(3) REQUIREMENTS FOR APPROVAL.—The 

2 Board shall not certify an eligible entity unless such 

3 eligible entity agrees to the following requirements: 

4 ‘‘(A) SEPARATE ACCOUNTING.—Each eligi5 ble entity shall, with respect to each Tier III 

6 Investment Option offered by such eligible enti7 ty to participating individuals—

8 ‘‘(i) establish separate accounts for 

9 the contributions of each participating in10 dividual, and any earnings properly allo11 cable to the contributions, and 

12 ‘‘(ii) maintain separate recordkeeping 

13 with respect to each account. 

14 ‘‘(B) TREATMENT OF AMOUNTS HELD IN

15 FUND.—Amounts deposited into, and held and 

16 accounted for in, a Tier III Investment Option 

17 with respect to any participating individual 

18 shall be treated as property of such partici19 pating individual, held in trust for such partici20 pating individual. 

21 ‘‘(C) TRUST REQUIREMENTS.—Amounts 

22 held and accounted for with respect to a partici23 pating individual shall be held in a trust created 

24 or organized in the United States for the exclu-
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•HR 4851 IH 

1 sive benefit of such individual or his bene2 ficiaries. 

3 ‘‘(D) EXEMPTION FROM THIRD PARTY

4 CLAIMS.—Each Tier III Investment Option 

5 shall be exempt from any and all third party 

6 claims against the eligible entity. 

7 ‘‘(E) DISCLOSURE OF ADMINISTRATIVE

8 COSTS.—Each eligible entity offering a Tier III 

9 Investment Option under this section shall pro10 vide to each participating individual an annual 

11 disclosure of the rate of administrative costs 

12 chargeable with respect to investment in such 

13 Option. Such disclosure shall be written in a 

14 manner calculated to be understood by the av15 erage participating individual. The Board shall 

16 provide for coordination of disclosures with re17 spect to Tier III Investment Options under this 

18 subparagraph so as to assist participating indi19 viduals in comparing alternative Options based 

20 on administrative costs. 

21 ‘‘(F) REPORTING TO THE EXECUTIVE DI22 RECTOR AND THE BOARD.—Each eligible entity 

23 shall provide reports to the Executive Director 

24 and the Board at such time, in such manner, 
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1 and containing such information as the Board 

2 may require. 

3 ‘‘(4) ELIGIBLE ENTITY DEFINED.—For pur4 poses of this section, the term ‘eligible entity’ means 

5 any investment company (as defined in section 3 of 

6 the Investment Company Act of 1940) or other per7 son that the Board determines appropriate to offer 

8 Tier III Investment Options under this part. 

9 ‘‘(c) APPROVAL OF TIER III INVESTMENT OP10 TIONS.—

11 ‘‘(1) IN GENERAL.—No funds may be trans12 ferred into a Tier III Investment Option unless the 

13 Board has approved an application submitted under 

14 paragraph (2) with respect to the option. 

15 ‘‘(2) APPLICATION.—With respect to each Tier 

16 III Investment Option an eligible entity certified 

17 under subsection (b)(1) seeks to offer, such entity 

18 shall submit an application to the Board at such 

19 time, in such manner, and containing such informa20 tion as the Board may require. 

21 ‘‘(3) QUALIFICATIONS FOR APPROVAL.—The 

22 Board may not approve an application submitted 

23 under paragraph (2) in connection with a Tier III 

24 Investment Option unless the following requirements 

25 are met: 
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•HR 4851 IH 

1 ‘‘(A) MUST BE OFFERED BY CERTIFIED

2 ELIGIBLE ENTITY.—The Tier III Investment 

3 Option is offered by an eligible entity certified 

4 under subsection (b). 

5 ‘‘(B) APPROPRIATE ALLOCATION OF IN6 VESTMENTS BETWEEN EQUITIES AND FIXED IN7 COME INSTRUMENTS.—The amount credited to 

8 a participating individual’s personal social secu9 rity savings account which is held for invest10 ment in any Tier III Investment Option is in11 vested in a combination of equities and fixed in12 come instruments so as to ensure, to the max13 imum extent practicable, that the percentage of 

14 such amount invested in equities is not more 

15 than 85 percent and not less than 45 percent. 

16 ‘‘(C) QUALITY FACTORS MET.—

17 ‘‘(i) IN GENERAL.—The Tier III In18 vestment Option meets qualifications which 

19 shall be prescribed by the Board relating 

20 to the quality factors described in clause 

21 (ii). 

22 ‘‘(ii) QUALITY FACTORS.—The quality 

23 factors described in this clause are—
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1 ‘‘(I) the safety and soundness of 

2 the Tier III Investment Option’s pro3 posed investment policy; 

4 ‘‘(II) the experience and record 

5 of performance of the proposed invest6 ment option, if any; 

7 ‘‘(III) the experience and record 

8 of performance of the entity issuing or 

9 offering such option; and 

10 ‘‘(IV) such other factors as the 

11 Board may determine appropriate. 

12 ‘‘(d) CONSIDERATIONS FOR CERTIFICATION AND AP13 PROVAL.—In determining whether to certify an eligible en14 tity under subsection (b) or to approve a Tier III Invest15 ment Option under subsection (c), the Board shall—

16 ‘‘(1) act in the best interests of the partici17 pating individuals; 

18 ‘‘(2) base its determination solely on consider19 ations of balancing safety and soundness of the Tier 

20 III Investment Option with the maximization of re21 turns of such option; and 

22 ‘‘(3) not base any determination related to the 

23 entity or option on political or other extraneous con24 siderations. 
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•HR 4851 IH 

1 ‘‘(e) SPONSORSHIP OF TIER III INVESTMENT OP2 TIONS BY MEMBERSHIP AND LABOR ORGANIZATIONS.—

3 ‘‘(1) IN GENERAL.—A membership or labor or4 ganization (as defined by the Board) may sponsor 

5 Tier III Investment Options under contracts with el6 igible entities certified under subsection (b) who 

7 shall administer the investment option if such invest8 ment option is approved by the Board under sub9 section (c). 

10 ‘‘(2) LIMITATION TO MEMBERSHIP.—A mem11 bership or labor organization (as so defined) may 

12 limit to the members of such organization participa13 tion in a Tier III Investment Option sponsored by 

14 such organization. 

15 ‘‘(f) DISTRIBUTIONS IN CASE OF DEATH.—Upon the 

16 death of a participating individual, the amount of any as17 sets held under a Tier III Investment Option credited to 

18 the personal social security savings account of such indi19 vidual shall be distributed in accordance with section 

20 259(e). 

21 ‘‘SEC. 259. PERSONAL SOCIAL SECURITY SAVINGS ANNUITY 

22 AND OTHER DISTRIBUTIONS. 

23 ‘‘(a) DATE OF INITIAL DISTRIBUTION.—Except as 

24 provided in subsection (e), distributions may be made to 

25 a participating individual only from amounts credited to 
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•HR 4851 IH 

1 the personal social security savings account of such indi2 vidual on and after the earliest of—

3 ‘‘(1) the date the participating individual at4 tains retirement age (as defined in section 216(l)(1)) 

5 or, if elected by the individual, early retirement age 

6 (as defined in section 216(l)(2)); or 

7 ‘‘(2) the date on which the amount credited to 

8 the participating individual’s personal social security 

9 savings account is sufficient to purchase a personal 

10 social security savings annuity with a monthly ben11 efit that is at least equal to the minimum annuity 

12 payment amount (as defined in subsection 

13 (b)(2)(C)(iii)). 

14 ‘‘(b) PERSONAL SOCIAL SECURITY SAVINGS ANNU15 ITIES.—

16 ‘‘(1) NOTICE OF AVAILABLE ANNUITIES.—Not 

17 later than the date determined under subsection (a), 

18 the Board shall notify each participating individual 

19 of—

20 ‘‘(A) the most recent listing of personal so21 cial security savings annuities approved by the 

22 Board under paragraph (3); and 

23 ‘‘(B) the entitlement of the participating 

24 individual to purchase such an annuity. 

25 ‘‘(2) PURCHASE OF ANNUITIES.—
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1 ‘‘(A) SELECTION OF ANNUITY.—Subject to 

2 subparagraph (C), on the date elected by the 

3 participating individual, but no earlier than the 

4 date determined under subsection (a), a partici5 pating individual may purchase a personal so6 cial security savings annuity selected from 

7 among the annuities approved by the Board 

8 under paragraph (3). 

9 ‘‘(B) TRANSFER OF ASSETS.—Upon the 

10 selection of an annuity by a participating indi11 vidual under subparagraph (A), the Board shall 

12 provide for the transfer of assets, credited to 

13 the personal social security savings account of 

14 the participating individual and held in the Tier 

15 II Investment Fund or under 1 or more Tier 

16 III Investment Options (or any combination 

17 thereof), in a total amount sufficient to pur18 chase the annuity selected by the participating 

19 individual under such subparagraph. 

20 ‘‘(C) MINIMUM ANNUITY PAYMENT

21 AMOUNT.—

22 ‘‘(i) IN GENERAL.—If, at the time a 

23 personal social security savings annuity is 

24 purchased under subparagraph (A), the as25 sets credited to the personal social security 
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•HR 4851 IH 

1 savings account of the participating indi2 vidual are sufficient to purchase a personal 

3 social security savings annuity approved by 

4 the Board under paragraph (3) with a 

5 monthly payment that is at least equal to 

6 the minimum annuity payment amount, 

7 the amount of the monthly benefit pro8 vided by such annuity may not be less then 

9 the minimum annuity payment amount. 

10 ‘‘(ii) CONSTRUCTION.—Nothing in 

11 this subparagraph shall be construed to 

12 prohibit a participating individual from 

13 using personal social security savings ac14 count assets to purchase a personal social 

15 security savings annuity which provides for 

16 a monthly payment in excess of the min17 imum amount required under clause (i). 

18 ‘‘(iii) MINIMUM ANNUITY PAYMENT

19 AMOUNT DEFINED.—For purposes of this 

20 part, the term ‘minimum annuity payment 

21 amount’ means, in connection with any 

22 participating individual, the excess of—

23 ‘‘(I) the deemed total part A 

24 monthly benefit amount with respect 

25 to the participating individual, deter-
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•HR 4851 IH 

1 mined as if section 215(j) did not 

2 apply, over 

3 ‘‘(II) the deemed total part A 

4 monthly benefit amount with respect 

5 to the participating individual, deter6 mined with the application of section 

7 215(j). 

8 ‘‘(iv) DEEMED TOTAL PART A MONTH9 LY BENEFIT AMOUNT.—

10 ‘‘(I) IN GENERAL.—For purposes 

11 of clause (iii), the term ‘deemed total 

12 part A monthly benefit amount’ 

13 means, with respect to a participating 

14 individual, the total amount which 

15 would be payable as monthly insur16 ance benefits under section 202 for 

17 the month in which the participating 

18 individual attains or would attain 

19 early retirement age (as defined in 

20 section 216(l)(2)), based on the par21 ticipating individual’s wages and self22 employment income, if the partici23 pating individual applied for old-age 

24 insurance benefits under section 

25 202(a) during such month and all 
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•HR 4851 IH 

1 other individuals who would therefore 

2 be eligible for benefits under section 

3 202 for such month based on such 

4 wages and self-employment income 

5 applied for such benefits during such 

6 month. 

7 ‘‘(II) ASSUMPTIONS.—For pur8 poses of this clause, in the case of a 

9 participating individual with respect 

10 to whom determinations under this 

11 clause are made prior to the month 

12 described in subclause (I), the partici13 pating individual’s average indexed 

14 monthly earnings (within the meaning 

15 of section 215(b)) for such month 

16 shall be projected, under regulations 

17 which shall be prescribed by the 

18 Board, on the basis of reasonable ac19 tuarial assumptions, and the Board 

20 shall assume the survival through the 

21 end of such month of all other individ22 uals described in subclause (I). 

23 ‘‘(3) APPROVAL OF PERSONAL SOCIAL SECU24 RITY SAVINGS ANNUITIES AND ISSUERS.—

25 ‘‘(A) CERTIFICATION OF ISSUERS.—
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•HR 4851 IH 

1 ‘‘(i) IN GENERAL.—The Board shall 

2 certify issuers eligible to enter into annuity 

3 contracts with participating individuals 

4 under this part. 

5 ‘‘(ii) APPLICATION.—Any issuer that 

6 desires to be certified by the Board to 

7 issue a personal social security savings an8 nuity shall submit an application to the 

9 Board at such time, in such manner, and 

10 containing such information as the Board 

11 may require. 

12 ‘‘(iii) SEPARATE ACCOUNTING.—As a 

13 condition of certification under paragraph 

14 (1), each issuer shall, with respect to each 

15 personal social security savings annuity 

16 issued by such issuer to participating indi17 viduals—

18 ‘‘(I) establish a separate account 

19 for each participating individual, and 

20 ‘‘(II) maintain separate record21 keeping with respect to each account. 

22 ‘‘(iv) EXEMPTION FROM THIRD PARTY

23 CLAIMS.—Each personal social security 

24 savings annuity shall be exempt from any 
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•HR 4851 IH 

1 and all third party claims against the 

2 issuer. 

3 ‘‘(B) APPROVAL OF PERSONAL SOCIAL SE4 CURITY SAVINGS ANNUITIES.—

5 ‘‘(i) IN GENERAL.—No funds may be 

6 used to purchase a personal social security 

7 savings annuity unless the Board has ap8 proved an application submitted under 

9 clause (ii) with respect to the annuity. 

10 ‘‘(ii) APPLICATION.—With respect to 

11 each personal social security savings annu12 ity that an issuer certified under subpara13 graph (A)(i) seeks to issue, such issuer 

14 shall submit an application to the Board at 

15 such time, in such manner, and containing 

16 such information as the Board may re17 quire. 

18 ‘‘(iii) QUALIFICATIONS FOR AP19 PROVAL.—

20 ‘‘(I) IN GENERAL.—The Board 

21 may not approve an application under 

22 clause (i) unless the personal social 

23 security savings annuity that is the 

24 subject of the application meets quali25 fications which shall be prescribed by 
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•HR 4851 IH 

1 the Board relating to the quality fac2 tors described in subclause (II) and 

3 the application demonstrates that the 

4 cost-of-living protection requirement 

5 described in subclause (III) are met. 

6 ‘‘(II) QUALITY FACTORS.—The 

7 quality factors described in this sub8 paragraph include the safety and 

9 soundness of the annuity, the experi10 ence and record of performance of the 

11 issuer issuing the annuity, and such 

12 other factors as the Board may deter13 mine appropriate. 

14 ‘‘(III) COST-OF-LIVING PROTEC15 TION REQUIREMENT.—The cost-of-liv16 ing requirement of this subclause is 

17 met only if the terms governing the 

18 annuity include procedures providing 

19 for adjustments in the amount of the 

20 monthly payments in the same man21 ner and to the same extent as adjust22 ments are provided for under the pro23 cedures used to adjust benefit 

24 amounts under section 215(i)(2)(A). 

25 Nothing in this subclause shall be 
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•HR 4851 IH 

1 construed to preclude the terms gov2 erning such an annuity from pro3 viding for adjustments in the amount 

4 of monthly payments resulting in a 

5 payment for any month greater than 

6 the payment for that month that 

7 would result from adjustments re8 quired under the preceding sentence. 

9 ‘‘(c) PURCHASE OF ANNUITIES IN THE EVENT OF IN10 SUFFICIENT ASSETS.—If a participating individual desires 

11 to purchase a personal social security savings annuity 

12 under subsection (b) on or after the date determined 

13 under subsection (a)(1) and the assets of the personal so14 cial security savings account of such individual are insuffi15 cient to purchase a personal social security savings annu16 ity that provides for a monthly payment that is at least 

17 equal to the minimum annuity payment amount (as de18 fined in subsection (b)(2)(C)(iii)), the participating indi19 vidual shall purchase the largest personal social security 

20 savings annuity that the participating individual’s per21 sonal social security savings account can fund and that 

22 otherwise meets the requirements of subsection (b) (in23 cluding the cost-of-living protection requirement of sub24 section (b)(3)(B)(iii)(III), and the Board shall provide for 

25 appropriate certification to the Secretary of the Treasury 
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•HR 4851 IH 

1 with respect to the participating individual’s eligibility for 

2 guarantee payments under section 260. 

3 ‘‘(d) RIGHT TO USE EXCESS PERSONAL SOCIAL SE4 CURITY SAVINGS ACCOUNT ASSETS.—To the extent assets 

5 credited to a participating individual’s personal social se6 curity savings account remain after the purchase of an an7 nuity under subsection (b), the remaining assets shall be 

8 payable to the participating individual at such time, in 

9 such manner, and in such amounts as the participating 

10 individual may specify. 

11 ‘‘(e) DISTRIBUTIONS IN CASE OF DEATH.—If the 

12 participating individual dies before all amounts which are 

13 held in the Tier I Investment Fund or the Tier II Invest14 ment Fund of the Savings Fund or held under a Tier III 

15 Investment Option and which are credited to the personal 

16 social security savings account of the individual are other17 wise distributed in accordance with this section, such 

18 amounts shall be distributed, under regulations which 

19 shall be prescribed by the Board—

20 ‘‘(1) in any case in which one or more bene21 ficiaries have been designated in advance, to such 

22 beneficiaries in accordance with such designation as 

23 provided in such regulations, and 
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•HR 4851 IH 

1 ‘‘(2) in the case of any amount not distributed 

2 as described in paragraph (1), to such individual’s 

3 estate. 

4 ‘‘(f) PERSONAL SOCIAL SECURITY SAVINGS ANNU5 ITY.—For purposes of this part, the term ‘personal social 

6 security savings annuity’ means an annuity that meets the 

7 following requirements: 

8 ‘‘(1) The annuity starting date (as defined in 

9 section 72(c)(4) of the Internal Revenue Code of 

10 1986) commences on the first day of the month be11 ginning after the date of the purchase of the annu12 ity. 

13 ‘‘(2) The terms of the annuity provide, except 

14 in any case described in subsection (c), for a month15 ly payment to the participating individual during the 

16 life of the participating individual equal to at least 

17 the minimum annuity payment amount (as defined 

18 in subsection (b)(2)(C)(iii)). 

19 ‘‘(3) The terms of the annuity include such 

20 terms and conditions as the Board requires for the 

21 protection of the annuitant (including terms meeting 

22 the cost-of-living requirement of subsection 

23 (b)(3)(B)(iii)(III)). 
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1 ‘‘SEC. 260. GUARANTEE OF PROMISED BENEFITS. 

2 ‘‘(a) IN GENERAL.—If, for any month ending after 

3 the date on which a participating individual attains retire4 ment age (as defined in section 216(l)(1)), the monthly 

5 payment under a participating individual’s personal social 

6 security savings annuity is less than the minimum annuity 

7 payment amount (as defined in section 259(b)(2)(C)(iii)), 

8 adjusted as provided in section 259(b)(3)(B)(iii)(III), the 

9 Board shall so certify to the Secretary of the Treasury 

10 and, upon receipt of such certification, such Secretary 

11 shall provide to the participating individual, from amounts 

12 in the Federal Old-Age and Survivors Insurance Trust 

13 Fund, a guaranty payment for such month to supplement 

14 the personal social security savings annuity and to guar15 antee full payment of such individual’s monthly promised 

16 benefits. 

17 ‘‘(b) GUARANTY PAYMENT.—For purposes of sub18 section (a), a participating individual’s guaranty payment 

19 for any month is equal to the excess of—

20 ‘‘(1) the minimum annuity payment amount (as 

21 defined in section 259(b)(2)(C)(iii)), adjusted as 

22 provided in section 259(b)(3)(B)(iii)(III); over 

23 ‘‘(2) the payment for such month of the per24 sonal social security savings annuity purchased by 

25 the participating individual. 
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•HR 4851 IH 

1 ‘‘(c) PROTECTION OF PART A NORMAL RETIREMENT

2 BENEFIT LEVELS.—

3 ‘‘(1) IN GENERAL.—In any case in which, for 

4 any month ending after the date on which a partici5 pating individual attains retirement age (as defined 

6 in section 216(l)(1))—

7 ‘‘(A) such individual’s assumed total nor8 mal retirement part A benefit for such month, 

9 determined without the application of section 

10 215(j), exceeds—

11 ‘‘(B) the sum of—

12 ‘‘(i) such individual’s assumed total 

13 normal retirement part A benefit for such 

14 month, determined with the application of 

15 section 215(j), plus 

16 ‘‘(ii) the monthly payment payable for 

17 such month under such individual’s per18 sonal social security savings annuity, 

19 the Secretary of the Treasury shall pay to such indi20 vidual for such month, from amounts in the Federal 

21 Old-Age and Survivors Insurance Trust Fund, an 

22 additional amount (if any) equal to the excess of the 

23 amount described in subparagraph (A) over the 

24 amount described in subparagraph (B). 
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•HR 4851 IH 

1 ‘‘(2) DEFINITION.—For purposes of this sub2 section, the term ‘assumed total normal retirement 

3 part A benefit’ means, in connection with a partici4 pating individual, the total amount of monthly insur5 ance benefits under section 202 based on such indi6 vidual’s wages and self-employment income (ad7 justed by taking into account adjustments under sec8 tion 215(i)) that would have been payable if such in9 dividual applied for old-age insurance benefits under 

10 section 202(a) during the month in which such indi11 vidual attains retirement age (as defined in section 

12 216(l)(1)). 

13 ‘‘SEC. 261. PERSONAL SOCIAL SECURITY SAVINGS ACCOUNT 

14 BOARD. 

15 ‘‘(a) ESTABLISHMENT.—There is established in the 

16 executive branch of the Government a Personal Social Se17 curity Savings Account Board. 

18 ‘‘(b) COMPOSITION.—The Board shall be composed 

19 of—

20 ‘‘(1) 3 members appointed by the President, of 

21 whom 1 shall be designated by the President as 

22 Chairman; and 

23 ‘‘(2) 2 members appointed by the President, of 

24 whom—
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•HR 4851 IH 

1 ‘‘(A) 1 shall be appointed by the President 

2 after taking into consideration the recommenda3 tion made by the Speaker of the House of Rep4 resentatives in consultation with the Minority 

5 Leader of the House of Representatives; and 

6 ‘‘(B) 1 shall be appointed by the President 

7 after taking into consideration the recommenda8 tion made by the Majority Leader of the Senate 

9 in consultation with the Minority Leader of the 

10 Senate. 

11 ‘‘(c) ADVICE AND CONSENT.—Appointments under 

12 subsection (b) shall be made by and with the advice and 

13 consent of the Senate. 

14 ‘‘(d) MEMBERSHIP REQUIREMENTS.—Members of 

15 the Board shall have substantial experience, training, and 

16 expertise in the management of financial investments and 

17 pension benefit plans. 

18 ‘‘(e) LENGTH OF APPOINTMENTS.—

19 ‘‘(1) TERMS.—A member of the Board shall be 

20 appointed for a term of 4 years, except that of the 

21 members first appointed under subsection (b)—

22 ‘‘(A) the Chairman shall be appointed for 

23 a term of 4 years; 
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1 ‘‘(B) the members appointed under sub2 section (b)(2) shall be appointed for terms of 3 

3 years; and 

4 ‘‘(C) the remaining members shall be ap5 pointed for terms of 2 years. 

6 ‘‘(2) VACANCIES.—

7 ‘‘(A) IN GENERAL.—A vacancy on the 

8 Board shall be filled in the manner in which the 

9 original appointment was made and shall be 

10 subject to any conditions that applied with re11 spect to the original appointment. 

12 ‘‘(B) COMPLETION OF TERM.—An indi13 vidual chosen to fill a vacancy shall be ap14 pointed for the unexpired term of the member 

15 replaced. 

16 ‘‘(3) EXPIRATION.—The term of any member 

17 shall not expire before the date on which the mem18 ber’s successor takes office. 

19 ‘‘(f) DUTIES.—The Board shall—

20 ‘‘(1) administer the program established under 

21 this part; 

22 ‘‘(2) establish policies for the investment and 

23 management of the Savings Fund, including the 

24 Tier I Investment Fund and the Tier II Investment 

25 Fund, and amounts held under Tier III Investment 
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1 Options, including policies applicable to the asset 

2 managers, recordkeepers, and custodians with re3 sponsibility for managing the investment of amounts 

4 credited to personal social security investment ac5 counts, and for the management and operation of 

6 personal social security savings annuities, which 

7 shall provide for—

8 ‘‘(A) prudent investments suitable for ac9 cumulating funds for payment of retirement in10 come; 

11 ‘‘(B) sound management practices; and 

12 ‘‘(C) low administrative costs; 

13 ‘‘(3) review the performance of investments 

14 made for the Tier I Investment Fund and the Tier 

15 II Investment Fund; 

16 ‘‘(4) review the performance of investments 

17 made under Tier III Investment Options; 

18 ‘‘(5) review the management and operation of 

19 personal social security savings annuities; 

20 ‘‘(6) review and approve the budget of the 

21 Board; and 

22 ‘‘(7) comply with the fiduciary requirements of 

23 part 4 of subtitle B of title I of the Employee Re24 tirement Income Security Act of 1974 (relating to fi25 duciary responsibility) in connection with any exer-
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1 cise of discretion in connection with the assets of the 

2 Savings Fund. 

3 ‘‘(g) ADMINISTRATIVE PROVISIONS.—

4 ‘‘(1) IN GENERAL.—The Board may—

5 ‘‘(A) adopt, alter, and use a seal; 

6 ‘‘(B) except as provided in paragraph (4), 

7 direct the Executive Director to take such ac8 tion as the Board considers appropriate to 

9 carry out the provisions of this part and the 

10 policies of the Board in accordance with delega11 tions under this part; 

12 ‘‘(C) upon the concurring votes of 4 mem13 bers, remove the Executive Director from office 

14 for good cause shown; 

15 ‘‘(D) provide to the Executive Director 

16 such resources as are necessary to carry out the 

17 duties of the Executive Director; and 

18 ‘‘(E) take such other actions as may be 

19 necessary to carry out the functions of the 

20 Board. 

21 ‘‘(2) MEETINGS.—The Board shall meet—

22 ‘‘(A) not less than once during each 

23 month; and 

24 ‘‘(B) at additional times at the call of the 

25 Chairman. 
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1 ‘‘(3) EXERCISE OF POWERS.—

2 ‘‘(A) IN GENERAL.—Except as provided in 

3 paragraph (1)(C), the Board shall perform the 

4 functions and exercise the powers of the Board 

5 on a majority vote of a quorum of the Board. 

6 Three members of the Board shall constitute a 

7 quorum for the transaction of business. 

8 ‘‘(B) VACANCIES.—A vacancy on the 

9 Board shall not impair the authority of a 

10 quorum of the Board to perform the functions 

11 and exercise the powers of the Board. 

12 ‘‘(4) LIMITATIONS ON INVESTMENTS.—The 

13 Board may not direct any person to invest or to 

14 cause to be invested any sums in the Tier II Invest15 ment Fund or any personal social security invest16 ment account in a specific asset or to dispose of or 

17 cause to be disposed of any specific asset of such 

18 Fund or any such account. 

19 ‘‘(h) COMPENSATION.—

20 ‘‘(1) IN GENERAL.—Each member of the Board 

21 who is not an officer or employee of the Federal 

22 Government shall be compensated at the daily rate 

23 of basic pay for level IV of the Executive Schedule 

24 for each day during which such member is engaged 

25 in performing a function of the Board. 
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1 ‘‘(2) EXPENSES.—A member of the Board shall 

2 be paid travel, per diem, and other necessary ex3 penses under subchapter I of chapter 57 of title 5, 

4 United States Code, while traveling away from such 

5 member’s home or regular place of business in the 

6 performance of the duties of the Board. 

7 ‘‘(3) SOURCE OF FUNDS.—Payments authorized 

8 under this subsection shall be paid from the Tier I 

9 Investment Fund or the Tier II Investment Fund, 

10 as determined appropriate by the Board. 

11 ‘‘(i) DISCHARGE OF RESPONSIBILITIES.—The mem12 bers of the Board shall discharge their responsibilities 

13 solely in the interest of the participating individuals and 

14 their beneficiaries under this part. 

15 ‘‘(j) ANNUAL INDEPENDENT AUDIT.—The Board 

16 shall annually engage an independent qualified public ac17 countant to audit the activities of the Board. 

18 ‘‘(k) SUBMISSION OF BUDGET TO CONGRESS.—The 

19 Board shall prepare and submit to the President, and, at 

20 the same time, to the appropriate committees of Congress, 

21 an annual budget of the expenses and other items relating 

22 to the Board which shall be included as a separate item 

23 in the budget required to be transmitted to Congress 

24 under section 1105 of title 31, United States Code. 
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1 ‘‘(l) SUBMISSION OF LEGISLATIVE RECOMMENDA2 TIONS.—The Board may submit to the President, and, at 

3 the same time, shall submit to each House of Congress, 

4 any legislative recommendations of the Board relating to 

5 any of its functions under this part or any other provision 

6 of law. 

7 ‘‘SEC. 262. EXECUTIVE DIRECTOR. 

8 ‘‘(a) APPOINTMENT OF EXECUTIVE DIRECTOR.—The 

9 Board shall appoint, without regard to the provisions of 

10 law governing appointments in the competitive service, an 

11 Executive Director by action agreed to by a majority of 

12 the members of the Board. 

13 ‘‘(b) DUTIES.—The Executive Director shall, as de14 termined appropriate by the Board—

15 ‘‘(1) carry out the policies established by the 

16 Board; 

17 ‘‘(2) invest and manage the Tier I Investment 

18 Fund and the Tier II Investment Fund in accord19 ance with the investment policies and other policies 

20 established by the Board; 

21 ‘‘(3) administer the provisions of this part re22 lating to the Tier I Investment Fund and the Tier 

23 II Investment Fund; and 

24 ‘‘(4) prescribe such regulations (other than reg25 ulations relating to fiduciary responsibilities) as may 
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1 be necessary for the administration of this part re2 lating to the Tier I Investment Fund and the Tier 

3 II Investment Fund. 

4 ‘‘(c) ADMINISTRATIVE AUTHORITY.—The Executive 

5 Director may, within the scope of the duties of the Execu6 tive Director as determined by the Board—

7 ‘‘(1) appoint such personnel as may be nec8 essary to carry out the provisions of this part relat9 ing to the Tier I Investment Fund and the Tier II 

10 Investment Fund; 

11 ‘‘(2) subject to approval by the Board, procure 

12 the services of experts and consultants under section 

13 3109 of title 5, United States Code; 

14 ‘‘(3) secure directly from an Executive agency, 

15 the United States Postal Service, or the Postal Rate 

16 Commission any information necessary to carry out 

17 the provisions of this part and the policies of the 

18 Board relating to the Tier I Investment Fund and 

19 the Tier II Investment Fund; 

20 ‘‘(4) make such payments out of sums in the 

21 Tier I Investment Fund and the Tier II Investment 

22 Fund as the Executive Director determines, in ac23 cordance with regulations of the Board, are nec24 essary to carry out the provisions of this part and 

25 the policies of the Board; 
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1 ‘‘(5) pay the compensation, per diem, and travel 

2 expenses of individuals appointed under paragraphs 

3 (1), (2), and (6) from the Tier I Investment Fund 

4 or the Tier II Investment Fund, in accordance with 

5 regulations of the Board; 

6 ‘‘(6) accept and use the services of individuals 

7 employed intermittently in the Government service 

8 and reimburse such individuals for travel expenses, 

9 authorized by section 5703 of title 5, United States 

10 Code, including per diem as authorized by section 

11 5702 of such title; 

12 ‘‘(7) except as otherwise expressly prohibited by 

13 law or the policies of the Board, delegate any of the 

14 Executive Director’s functions to such employees 

15 under the Board as the Executive Director may des16 ignate and authorize such successive redelegations of 

17 such functions to such employees under the Board 

18 as the Executive Director may consider to be nec19 essary or appropriate; and 

20 ‘‘(8) take such other actions as are appropriate 

21 to carry out the functions of the Executive Direc22 tor.’’. 

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

24 this section shall apply with respect to wages paid after 

25 December 31, 2004, for pay periods ending after such 
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1 date and self-employment income for taxable years begin2 ning after such date. 

3 SEC. 3. ADJUSTMENTS TO PRIMARY INSURANCE AMOUNTS. 

4 (a) IN GENERAL.—Section 215 of the Social Security 

5 Act (42 U.S.C. 415) is amended by adding at the end the 

6 following new subsection: 

7 ‘‘Adjustment of Primary Insurance Amount in Relation 

8 to Deposits Made to Personal Social Security Sav9 ings Accounts 

10 ‘‘(j)(1) Except as provided in paragraph (3), the pri11 mary insurance amount of a participating individual under 

12 the Personal Social Security Savings Accounts Program 

13 under part B of this title, as determined in accordance 

14 with this section before adjustments made under sub15 section (i), shall be equal to the product derived by multi16 plying—

17 ‘‘(A) the primary insurance amount as deter18 mined before the application of this subsection; by 

19 ‘‘(B) a fraction—

20 ‘‘(i) the numerator of which is the excess 

21 of—

22 ‘‘(I) the total of amount of redirected 

23 social security contributions (as defined in 

24 section 252(b)(3)) that would have been 

25 transferred to the Social Security Personal 
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1 Savings Fund in connection with such indi2 vidual for each year after such individual 

3 attained the age of 18 had the individual 

4 been a participating individual on the date 

5 such individual attained the age of 18, over 

6 ‘‘(II) the present value of the actual 

7 total amount of redirected social security 

8 contributions (as so defined) deposited in 

9 the Social Security Personal Savings Fund 

10 in connection with such individual for each 

11 year during which such individual was a 

12 participating individual, 

13 assuming for each year the present value of the 

14 amount determined for such year, and 

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

16 amount described in clause (i)(I), 

17 rounded to the next higher multiple of $0.10 where such 

18 product is a multiple of $0.05 but not a multiple of $0.10 

19 and to the nearest multiple of $0.10 in any other case. 

20 ‘‘(2) In determining the present values for purposes 

21 of paragraph (1), the Commissioner of Social Security 

22 shall assume an annual interest rate for any period equal 

23 to the average annual yield on investments of the Federal 

24 Old-Age and Survivors Insurance Trust Fund for such pe25 riod under section 201(d). 
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1 ‘‘(3) In the case of a participating individual who be2 comes entitled to disability insurance benefits under sec3 tion 223, such individual’s primary insurance amount 

4 shall be determined without regard to paragraph (1). 

5 ‘‘(4) In the case of an individual who becomes entitled 

6 to benefits under section 202, other than old-age insur7 ance benefits under section 202(a), on the basis of the 

8 wages and self-employment income of a participating indi9 vidual who dies before such participating individual pur10 chases a personal social security savings annuity under 

11 section 259, such participating individual’s primary insur12 ance amount shall be determined under this section with13 out regard to paragraph (1).’’. 

14 SEC. 4. GENERAL FUND TRANSFERS TO THE FEDERAL OLD15 AGE AND SURVIVORS INSURANCE TRUST 

16 FUND. 

17 (a) RECAPTURE OF CORPORATE TAX ON ACCOUNT

18 YIELDS.—

19 (1) IN GENERAL.—In the case of fiscal years 

20 beginning after September 30, 2004, the Secretary 

21 of the Treasury, in consultation with the Personal 

22 Social Security Savings Account Board, shall esti23 mate and transfer to the Federal Old-Age and Sur24 vivors Insurance Trust Fund established under sec25 tion 201 of the Social Security Act (42 U.S.C. 401) 
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1 within 3 months after the end of each fiscal year an 

2 amount equal to the recapture amount for such fis3 cal year. For purposes of the preceding sentence, the 

4 recapture amount for any fiscal year shall be equal 

5 to the amount of corporate tax receipts under the 

6 Internal Revenue Code of 1986 deposited in the 

7 Treasury for that fiscal year which are attributable 

8 to personal social security savings account invest9 ments under part B of title II of the Social Security 

10 Act. 

11 (2) INITIAL ASSUMPTIONS.—In determining the 

12 recapture amount under subsection (a) for fiscal 

13 years 2005 and 2006, the Secretary of the Treasury 

14 shall make the following assumptions concerning the 

15 total amount of taxable capital in the United States 

16 represented by the total assets held by personal so17 cial security savings accounts established under part 

18 B of title II of the Social Security Act: 

19 (A) 80 percent of such total assets are a 

20 net addition to national investments. 

21 (B) Of the amount described in subpara22 graph (A), 90 percent will be invested in the 

23 United States and subject to taxation under the 

24 Internal Revenue Code of 1986. 
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1 (C) Of the amount described in subpara2 graph (B), 95 percent will be subject to the 

3 Federal corporate tax. 

4 (D) The amount described in subpara5 graph (C) is subject to the statutory tax rate of 

6 35 percent (resulting in an effective corporate 

7 tax rate of 23.9 percent on the earnings of all 

8 such total assets). 

9 (b) RECAPTURE OF GOVERNMENT SAVINGS OVER

10 BASELINE.—

11 (1) IN GENERAL.—In the case of fiscal years 

12 beginning after September 30, 2004, the Secretary 

13 of the Treasury, in consultation with the Personal 

14 Social Security Savings Account Board, shall esti15 mate and transfer to the Federal Old-Age and Sur16 vivors Insurance Trust Fund established under sec17 tion 201 of the Social Security Act (42 U.S.C. 401) 

18 within 3 months after the end of each fiscal year an 

19 amount equal to the spending reductions amount for 

20 such fiscal year. For purposes of the preceding sen21 tence, the spending reductions amount shall be an 

22 amount equal to—

23 (A) for any fiscal year in the period begin24 ning with fiscal year 2005 and ending with fis25 cal year 2012, the excess of—
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1 (i) 20 percent of the gross domestic 

2 product (as determined by the Congres3 sional Budget Office) for the fiscal year for 

4 which the determination is made; over 

5 (ii) the product of—

6 (I) 20 percent of the gross do7 mestic product (as so determined) for 

8 the fiscal year for which the deter9 mination is made; and 

10 (II) 0.99, factored a number of 

11 times equal to the number of fiscal 

12 years during such period which end 

13 with or before the fiscal year for 

14 which the determination is made; and 

15 (B) for any fiscal year beginning after fis16 cal year 2012 and ending with the termination 

17 year—

18 (i) the amount determined under sub19 paragraph (A) for fiscal year 2012; in20 creased by 

21 (ii) the rate of growth of the gross do22 mestic product (as so determined) over the 

23 period beginning with fiscal year 2013 and 

24 ending with the fiscal year for which the 

25 determination is made. 
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1 (2) ACCOMODATION FOR LOW OASDI BALANCE

2 RATIO.—Notwithstanding paragraph (1)(B), in any 

3 case in which the OASDI trust fund ratio is less 

4 than 125 percent as of the end of the fiscal year 

5 preceding each fiscal year during any period of 1 or 

6 more fiscal years referred to in paragraph (1)(B) 

7 and preceding the termination year—

8 (A) the spending reductions amount for 

9 each fiscal year during such period shall be the 

10 excess of—

11 (i) 20 percent of the gross domestic 

12 product (as projected by the Department 

13 of Commerce) for the fiscal year for which 

14 the determination is made; over 

15 (ii) the product of—

16 (I) 20 percent of the gross do17 mestic product (as so projected) for 

18 the fiscal year for which the deter19 mination is made; and 

20 (II) 0.99, factored a number of 

21 times equal to the number of fiscal 

22 years during such period which end 

23 with or before the fiscal year for 

24 which the determination is made plus 

25 the number of fiscal years during the 
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1 period described in paragraph (1)(A), 

2 and 

3 (B) paragraph (1)(B) shall apply with re4 spect to subsequent fiscal years by substituting 

5 for the reference, in paragraph (1)(B)(i), to fis6 cal year 2012 a reference to the last fiscal year 

7 in such period. 

8 (3) TERMINATION YEAR.—For purposes of 

9 paragraph (1)(B), the ‘‘termination year’’ is the first 

10 fiscal year, after fiscal year 2012—

11 (A) for which the OASDI trust fund ratio 

12 is at least 125 percent; and 

13 (B) on the last day of which there are no 

14 outstanding transition obligations of the Self15 Liquidating Social Security Transition Fund 

16 under section 6. 

17 (4) OASDI TRUST FUND RATIO.—In paragraph 

18 (2)(A), the term ‘‘OASDI trust fund ratio’’ means, 

19 for a fiscal year, the ratio (expressed as a percent20 age) of—

21 (A) the combined balance in the Federal 

22 Old-Age and Survivors Insurance Trust Fund 

23 and the Federal Disability Insurance Trust 

24 Fund, as of the last day of such fiscal year; 

25 over 
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1 (B) the amount estimated by the Commis2 sioner of Social Security to be the total amount 

3 to be paid from such Trust Funds during the 

4 fiscal year following such fiscal year for all pur5 poses authorized by section 201 of the Social 

6 Security Act (excluding any transfer payments 

7 between such Trust Funds and reducing the 

8 amount of any transfer to the Railroad Retire9 ment Account by the amount of any transfers 

10 into either such Trust Fund from such Ac11 count). 

12 SEC. 5. TAX TREATMENT OF ACCOUNTS. 

13 (a) IN GENERAL.—

14 (1) IN GENERAL.—Subchapter F of chapter 1 

15 of the Internal Revenue Code of 1986 (relating to 

16 exempt organizations) is amended by adding at the 

17 end the following new part: 

18 ‘‘PART IX—PERSONAL SOCIAL SECURITY 

19 SAVINGS PROGRAM

‘‘Sec. 530A. Personal social security savings program.

20 ‘‘SEC. 530A. PERSONAL SOCIAL SECURITY SAVINGS PRO21 GRAM. 

22 ‘‘(a) GENERAL RULE.—The Social Security Personal 

23 Savings Fund and each Tier III Investment Option are 

24 exempt from taxation under this subtitle. Notwithstanding 
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1 the preceding sentence, a personal social security savings 

2 account is subject to the taxes imposed by section 511 (re3 lating to imposition of tax on unrelated business income 

4 of charitable, etc. organizations). 

5 ‘‘(b) DISTRIBUTIONS.—

6 ‘‘(1) IN GENERAL.—Any qualified distribution 

7 from amounts credited to a personal social security 

8 savings account from the Social Security Personal 

9 Savings Fund or held in a Tier III Investment Op10 tion shall not be included in the gross income of the 

11 distributee. 

12 ‘‘(2) QUALIFIED DISTRIBUTION.—For purposes 

13 of paragraph (1), the term ‘qualified distribution’ 

14 means a distribution which meets the requirements 

15 of section 259 of the Social Security Act and which 

16 is not a guaranty payment (as defined by section 

17 260 of such Act). 

18 ‘‘(c) DEFINITIONS.—For purposes of this section—

19 ‘‘(1) PERSONAL SOCIAL SECURITY SAVINGS AC20 COUNT.—For purposes of this section, the term ‘per21 sonal social security savings account’ means an ac22 count established under section 254(a) of the Social 

23 Security Act. 

24 ‘‘(2) SOCIAL SECURITY PERSONAL SAVINGS

25 FUND.—The term ‘Social Security Personal Savings 
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1 Fund’ means the Savings Fund established under 

2 section 252 of the Social Security Act. 

3 ‘‘(3) TIER III INVESTMENT OPTION.—The term 

4 ‘Tier III Investment Option’ has the meaning given 

5 such term by section 251(9) of the Social Security 

6 Act. 

7 ‘‘(d) ESTATE TAX TREATMENT.—No amount shall be 

8 includible in the gross estate of any individual for pur9 poses of chapter 11 by reason of a distribution in the case 

10 of death under section 259(e) of the Social Security Act.’’. 

11 (2) CONFORMING AMENDMENT.—Section 

12 86(d)(1)(A) of such Code is amended by inserting 

13 ‘‘part A of’’ after ‘‘under’’. 

14 (3) CLERICAL AMENDMENT.—The table of 

15 parts for subchapter F of chapter 1 of such Code is 

16 amended by adding after the item relating to part 

17 VIII the following new item:

‘‘PART IX. PERSONAL SOCIAL SECURITY SAVINGS PROGRAM’’.

18 (b) GUARANTY PAYMENTS.—Paragraph (1) of sec19 tion 86(d) of the Internal Revenue Act of 1986, as amend20 ed by subsection (b), is amended by striking ‘‘or’’ at the 

21 end of subparagraph (A), by striking the period and in22 serting ‘‘, or’’ at the end of subparagraph (B), and by 

23 adding at the end the following new subparagraph: 

24 ‘‘(C) a guaranty payment under section 

25 260(a), and a payment of an additional amount 
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1 under section 260(c), of the Social Security 

2 Act.’’. 

3 (c) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years beginning after 

5 December 31, 2004. 

6 SEC. 6. SELF-LIQUIDATING SOCIAL SECURITY TRANSITION 

7 FUND. 

8 (a) ESTABLISHMENT.—There is hereby created on 

9 the books of the Treasury of the United States a trust 

10 fund to be known as the Self-Liquidating Social Security 

11 Transition Fund (in this section referred to as the ‘‘Tran12 sition Fund’’). 

13 (b) DEPOSIT OF OASDI TRUST FUND SURPLUS.—

14 (1) IN GENERAL.—There are appropriated to 

15 the Transition Fund for the fiscal year beginning in 

16 2030, and for each fiscal year thereafter, out of any 

17 moneys in the Federal Old-Age and Survivors Insur18 ance Trust Fund, amounts equivalent to the OASDI 

19 trust fund surplus (as defined in paragraph (2)) for 

20 the preceding fiscal year. 

21 (2) OASDI TRUST FUND SURPLUS DEFINED.—

22 In this section, the term ‘‘OASDI trust fund sur23 plus’’ for a fiscal year means the dollar amount by 

24 which the Federal Old-Age and Survivors Insurance 

25 Trust Fund could be reduced as of the end of such 
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1 fiscal year so as to result in an OASDI trust fund 

2 ratio (as defined in section 5(b)(3)) for such fiscal 

3 year equal to 125 percent. 

4 (3) RULE OF CONSTRUCTION.—This section 

5 shall not be construed to require redemption of obli6 gations of the Trust Fund for the purpose of mak7 ing transfers to the Transition Fund under this sec8 tion or for any other purpose other than to provide 

9 for payment of benefits under part A of title II of 

10 the Social Security Act. 

11 (c) TRANSFERS BASED ON ESTIMATES.—The 

12 amounts appropriated by subsection (c)(1) shall be trans13 ferred from time to time from the Federal Old-Age and 

14 Survivors Insurance Trust Fund to the Transition Fund, 

15 such amounts to be determined on the basis of estimates 

16 by the Commissioner of Social Security. Proper adjust17 ments shall be made in amounts subsequently transferred 

18 to the extent prior estimates were in excess of or were 

19 less than such surplus. 

20 (d) BOARD OF TRUSTEES.—

21 (1) ESTABLISHMENT.—With respect to the 

22 Transition Fund, there is hereby created a body to 

23 be known as the Board of Trustees of the Transition 

24 Fund (in this section referred to as the ‘‘Board of 

25 Trustees’’) composed of the Commissioner of Social 
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1 Security, the Secretary of the Treasury, and the 

2 members of the Personal Social Security Savings Ac3 count Board established under section 261 of the 

4 Social Security Act. 

5 (2) MEETINGS.—The Board of Trustees shall 

6 meet not less frequently than once each calendar 

7 year. 

8 (3) DUTIES.—The duties of the Board of 

9 Trustees are as follows: 

10 (A) Use all funds paid into the Transition 

11 Fund to redeem obligations issued under sec12 tion 8 as soon as practicable. 

13 (B) Report to Congress not later than the 

14 first day of April of each year on the operation 

15 and status of the Transition Fund during the 

16 preceding fiscal year and on its expected oper17 ation and status during the current fiscal year 

18 and the next 2 fiscal years. 

19 (C) Review the general policies followed in 

20 managing the Transition Fund, and recommend 

21 changes in such policies, including necessary 

22 changes in the provisions of law which govern 

23 the way in which the Transition Fund is to be 

24 managed. 
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1 (e) POLICY DECLARATION.—It is hereby declared the 

2 policy of the United States that all obligations issued 

3 under section 8 are to be redeemed by the Transition 

4 Fund as soon as possible. 

5 (f) SUNSET.—On the first date as of which all of the 

6 obligations issued under section 8 have been redeemed, 

7 any balance remaining in the Transition Fund as of such 

8 date shall be deposited in the Federal Old-Age and Sur9 vivors Insurance Trust Fund, the terms of the Board of 

10 Trustees shall end, and this section shall be repealed. 

11 SEC. 7. ISSUANCE OF TRANSITION FUND BONDS. 

12 (a) ISSUANCE.—

13 (1) IN GENERAL.—The purposes for which obli14 gations of the United States may be issued under 

15 chapter 31 of title 31, United States Code, are here16 by extended to authorize the issuance at par of pub17 lic-debt obligations by the Self-Liquidating Social 

18 Security Transition Fund (in this section referred to 

19 as the ‘‘Transition Fund’’). 

20 (2) REQUIRED ISSUANCE.—Beginning on Janu21 ary 1, 2005, whenever any obligation held in the 

22 Federal Old-Age and Survivors Insurance Trust 

23 Fund or the Federal Disability Insurance Trust 

24 Fund is repaid from the general fund of the Treas25 ury to either of such Trust Funds, the Transition 
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1 Fund shall issue an obligation under this subsection 

2 in an amount equal to the amount of interest and 

3 principal so repaid. 

4 (3) TRANSFER OF PROCEEDS.—Proceeds from 

5 the issuance of any obligation issued under this sec6 tion shall be transferred to the general fund of the 

7 Treasury. 

8 (4) ACCOUNTING.—The debt owed on any obli9 gation issued under this section shall be considered 

10 to be debt of the Transition Fund and shall be ac11 counted for in such manner. 

12 (b) MATURITIES AND INTEREST RATE.—Such obliga13 tions issued by the Transition Fund for purchase by the 

14 public shall have maturities fixed with due regard for the 

15 needs of the Transition Fund and shall bear interest at 

16 a rate equal to the average market yield (computed by the 

17 Secretary of the Treasury on the basis of market 

18 quotations as of the end of the calendar month next pre19 ceding the date of such issue) on all marketable interest20 bearing obligations of the United States then forming a 

21 part of the public debt which are not due or callable until 

22 after the expiration of 4 years from the end of such cal23 endar month, except that where such average market yield 

24 is not a multiple of one-eighth of 1 per centum, the rate 
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1 of interest on such obligations shall be the multiple of one2 eighth of 1 per centum nearest such market yield. 

3 (c) REPAYMENT OF OBLIGATIONS.—Only funds in 

4 the Transition Fund may be used to redeem obligations 

5 issued under this section. 

6 SEC. 8. ACCOUNTING FOR THE OLD-AGE, SURVIVORS, AND 

7 DISABILITY INSURANCE PROGRAM AND THE 

8 PERSONAL SOCIAL SECURITY SAVINGS PRO9 GRAM. 

10 Title VII of the Social Security Act is amended by 

11 inserting after section 705 (42 U.S.C. 906) the following 

12 new section: 

13 ‘‘ACCOUNTING FOR THE OLD-AGE, SURVIVORS, AND DIS14 ABILITY INSURANCE PROGRAM AND THE INDIVIDUAL

15 SOCIAL SECURITY INVESTMENT PROGRAM

16 ‘‘Social Security Lockbox Budget 

17 ‘‘SEC. 706. (a) At the time of the transmittal to the 

18 Congress by the President of the budget of the United 

19 States Government, the President shall transmit to each 

20 House of the Congress a separate report (to be known as 

21 the ‘Social Security Lockbox Budget’) detailing the per22 formance of the Social Security Part A Account, the Social 

23 Security Part B Account, and the Self-Liquidating Social 

24 Security Transition Fund Account (established under sub25 section (b)) during the preceding fiscal year. Such report 

26 shall set forth, as determined as of the end of the year—
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1 ‘‘(1) the amount of the balance of each account, 

2 ‘‘(2) the amount of the total charges and the 

3 amount of the total credits to each account for the 

4 year, and 

5 ‘‘(3) the amount of the total for the year of 

6 each category of charges and credits itemized in sub7 section (b). 

8 ‘‘Establishment of Accounts 

9 ‘‘(b) For purposes of accounting for certain receipts 

10 and disbursement of the Treasury of the United States 

11 in connection with the Old-Age, Survivors, and Disability 

12 Insurance Program under part A of title II of the Social 

13 Security Act and the Individual Social Security Invest14 ment Program under part B of such title, the Secretary 

15 of the Treasury shall establish and maintain a Social Se16 curity Part A Account, a Social Security Part B Account, 

17 and a Self-Liquidating Social Security Transition Fund 

18 Account. 

19 ‘‘Credits and Charges to the Social Security Part A 

20 Account 

21 ‘‘(c)(1) For each fiscal year, the Social Security Part 

22 A Account shall be credited with the sum of—

23 ‘‘(A) all receipts during the year by the Federal 

24 Old-Age and Survivors Insurance Trust Fund and 

25 the Federal Disability Insurance Trust Fund under 
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1 section 201 of the Social Security Act (including 

2 amounts received as interest on notes and obliga3 tions purchased by the Trust Funds under section 

4 201(d) of such Act, and excluding amounts received 

5 in redemption of such notes and obligations and 

6 amounts received by either such Trust Fund as 

7 transfers from the other such Trust Fund), 

8 ‘‘(B) all amounts transferred during the year 

9 from the general fund of the Treasury to the Fed10 eral Old-Age and Survivors Insurance Trust Fund 

11 as recapture of corporate tax yields under section 

12 5(a), 

13 ‘‘(C) all amounts transferred during the year 

14 from the general fund of the Treasury to the Fed15 eral Old-Age and Survivors Insurance Trust Fund 

16 as recapture of Government savings over the base17 line under section 5(b), 

18 ‘‘(D) all amounts transferred during the year 

19 from the general fund of the Treasury to the Fed20 eral Old-Age and Survivors Insurance Trust Fund 

21 under section 11 (relating to dedication of budget 

22 surpluses to saving social security), and 

23 ‘‘(E) all receipts during the year by the Federal 

24 Old-Age and Survivors Insurance Trust Fund and 

25 the Federal Disability Insurance Trust Fund under 
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1 section 121(e) of the Social Security Amendments of 

2 1983 (relating to appropriation of amounts equiva3 lent to taxes on social security benefits) (42 U.S.C. 

4 401 note). 

5 ‘‘(2) For each fiscal year, the Social Security Part 

6 A Account shall be charged with the sum of—

7 ‘‘(A) all benefits paid during the year from the 

8 Federal Old-Age and Survivors Insurance Trust 

9 Fund and the Federal Disability Insurance Trust 

10 Fund under part A of title II of the Social Security 

11 Act, 

12 ‘‘(B) all redirected social security contributions 

13 transferred during the year to the Social Security 

14 Personal Savings Fund under section 252(b) of the 

15 Social Security Act, 

16 ‘‘(C) all other expenditures during the year 

17 from the Trust Funds under part A of title II (ex18 cluding amounts expended as transfers by either 

19 such Trust Fund to the other such Trust Fund and 

20 amounts paid for the purchase of notes and obliga21 tions under section 201(d) of the Social Security 

22 Act), and 

23 ‘‘(D) all transfers from the Federal Old-Age 

24 and Survivors Insurance Trust Fund to the Self-Liq25 uidating Social Security Transition Fund under sec-
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1 tion 6 of the Social Security Personal Savings and 

2 Prosperity Act of 2004. 

3 ‘‘Charges and Credits to the Social Security Part B 

4 Account 

5 ‘‘(d)(1) For each fiscal year, the Social Security Part 

6 B Account shall be credited with—

7 ‘‘(A) all redirected social security contributions 

8 transferred during the year to the Personal Social 

9 Security Savings Fund under section 252(b) of the 

10 Social Security Act, and 

11 ‘‘(B) any net increase in the Tier I Investment 

12 Fund attributable to investment for the fiscal year, 

13 any net increase in the Tier II Investment Fund at14 tributable to investment for the fiscal year, and the 

15 total amount of any net increases in Tier III Invest16 ment Options attributable to investment for the fis17 cal year. 

18 ‘‘(2) For each fiscal year, the Social Security Part 

19 B Account shall be charged with—

20 ‘‘(A) all administrative costs incurred for the 

21 fiscal year with respect to the Tier I Investment 

22 Fund, the Tier II Investment Fund, and the Tier III 

23 Investment Options, 

24 ‘‘(B) any net decrease in the Tier I Investment 

25 Fund attributable to investment for the fiscal year, 
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1 any net decrease in the Tier II Investment Fund at2 tributable to investment for the fiscal year, and the 

3 total amount of any net decreases in Tier III Invest4 ment Options attributable to investment for the fis5 cal year, and 

6 ‘‘(C) all amounts distributed during the year 

7 under section 259 from the Tier I Investment Fund, 

8 the Tier II Investment Fund, and the Tier III In9 vestment Options. 

10 ‘‘Charges and Credits to the Self-Liquidating Social 

11 Security Transition Fund Account 

12 ‘‘(e)(1) For each fiscal year, the Self-Liquidating So13 cial Security Transition Account shall be credited with—

14 ‘‘(A) all transfers to the Transition Fund from 

15 the Federal Old-Age and Survivors Insurance Trust 

16 Fund under section 6(b) of the Social Security Per17 sonal Savings Guarantee and Prosperity Act of 

18 2004, and 

19 ‘‘(B) all amounts expended during the fiscal 

20 year from the Trust Funds in the redemption under 

21 section 7(e) of such Act of obligations issued by the 

22 Transition Fund under section 8 of such Act. 

23 ‘‘(2) For each fiscal year, the Self-Liquidating Social 

24 Security Transition Fund Account shall be charged with 

25 the total amount of obligations issued during the fiscal 
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1 year by the Transition Fund under section 7 of the Social 

2 Security Personal Savings Guarantee and Prosperity Act 

3 of 2004.’’. 

4 SEC. 9. BUDGETARY TREATMENT OF SOCIAL SECURITY. 

5 (a) IN GENERAL.—Section 710 of the Social Security 

6 Act (42 U.S.C. 911) is amended to read as follows: 

7 ‘‘BUDGETARY TREATMENT OF SOCIAL SECURITY

8 ‘‘SEC. 710. (a) IN GENERAL.—Notwithstanding any 

9 other provision of law and except as provided in subsection 

10 (b), the receipts and disbursements of the Federal Old11 Age and Survivors Insurance Trust Fund, the Federal 

12 Disability Insurance Trust Fund, and the Social Security 

13 Personal Savings Fund (including transfers to and from 

14 the Federal Old-Age and Survivors Insurance Trust Fund 

15 or the Federal Disability Insurance Trust Fund relating 

16 to the acquisition or redemption of obligations acquired 

17 under section 201(d) of the Social Security Act) and the 

18 taxes imposed under sections 1401 and 3101 of the Inter19 nal Revenue Code of 1986 shall not be counted as new 

20 budget authority, outlays, receipts, or deficit or surplus 

21 for purposes of the budget of the Government as sub22 mitted by the President or the congressional budget or be 

23 reported as new budget authority, outlays, receipts, or def24 icit or surplus in any report of the Congressional Budget 

25 Office or any other agency or instrumentality of the Gov26 ernment 
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1 ‘‘(b) MATTERS INCLUDED IN THE BUDGET.—Sub2 section (a) shall not apply with respect to the following: 

3 ‘‘(1) transfers from the general fund of the 

4 Treasury to the Federal Old-Age and Survivors In5 surance Trust Fund under section 4(a) of the Social 

6 Security Personal Savings Guarantee and Prosperity 

7 Act of 2004 (relating to recapture of corporate tax 

8 on account yields), which shall be treated as an ex9 penditure of the Government; 

10 ‘‘(2) transfers from the general fund of the 

11 Treasury to the Federal Old-Age and Survivors In12 surance Trust Fund under section 4(b) of the Social 

13 Security Personal Savings Guarantee and Prosperity 

14 Act of 2004 (relating to recapture of Government 

15 savings over baseline), which shall be treated as an 

16 expenditure of the Government; 

17 ‘‘(3) transfers from the general fund of the 

18 Treasury to the Federal Old-Age and Survivors In19 surance Trust Fund or the Federal Disability Insur20 ance Trust Fund under section 121(e) of the Social 

21 Security Amendments of 1983 (relating to appro22 priation of amounts equivalent to taxes on social se23 curity benefits) (42 U.S.C. 401 note), which shall be 

24 treated as an expenditure of the Government; and 
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1 ‘‘(4) revenues from taxes imposed under chap2 ter 1 of the Internal Revenue Code of 1986, to the 

3 extent attributable to section 86 of such Code (relat4 ing to taxation of social security and tier 1 railroad 

5 retirement benefits), which shall be treated as a re6 ceipt of the Government.’’. 

7 (b) CONFORMING AMENDMENTS.—

8 (1) Section 13301 of the Budget Enforcement 

9 Act of 1990 (2 U.S.C. 632; 2 U.S.C. 632 note) is 

10 repealed. 

11 (2) Section 405 of the Congressional Budget 

12 Act of 1974 (2 U.S.C. 655) is amended—

13 (A) by inserting ‘‘other than section 710 of 

14 the Social Security Act’’ after ‘‘Notwith15 standing any other provision of law’’; and 

16 (B) by striking ‘‘section, not including’’ 

17 and all that follows through ‘‘Funds,’’ and in18 serting ‘‘section’’ . 

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

20 this section shall apply with respect to fiscal years begin21 ning on or after October 1, 2005. 
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1 SEC. 10. DEDICATION OF BUDGET SURPLUSES TO SAVING 

2 SOCIAL SECURITY. 

3 Section 201 of the Social Security Act (as amended 

4 by section 103 of this Act) is amended further by adding 

5 at the end the following new subsection: 

6 ‘‘(p) In the case of any fiscal year beginning after 

7 September 30, 2005, for which the total amount treated 

8 as income of the Federal Government in the total budget 

9 of the United States have exceeded the total amount treat10 ed as expenditures of the Federal Government in the total 

11 budget of the United States (as determined by the Direc12 tor of the Office of Management and Budget), not later 

13 than 3 months after the end of such fiscal year, the Sec14 retary of the Treasury shall transfer from the general fund 

15 of the Treasury to the Federal Old-Age and Survivors In16 surance Trust Fund an amount equal to the lesser of—

17 ‘‘(1) the total amount transferred from the 

18 Trust Fund during such fiscal year to the Social Se19 curity Personal Savings Fund under section 252(b), 

20 or 

21 ‘‘(2) the amount by which such total amount 

22 treated as receipts exceeded such total amount treat23 ed as expenditures.’’. 
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1 SEC. 11. NATIONAL SPENDING LIMITATION. 

2 (a) IN GENERAL.—Section 1105 of title 31, United 

3 States Code, is amended by adding at the end the fol4 lowing new subsection: 

5 ‘‘(i)(1) The budget transmitted pursuant to sub6 section (a) for a fiscal year shall not provide for total ex7 penditures for the fiscal year for which the budget is sub8 mitted which are greater than the national spending limi9 tation specified under paragraph (3). 

10 ‘‘(2) For purposes of this section, the term ‘total ex11 penditures’ means, for any fiscal year, the sum of— 

12 ‘‘(A) the net expenditures of the budget of the 

13 United States for the fiscal year plus all expendi14 tures which are chargeable to the Social Security 

15 Part A Account in the Social Security Lockbox 

16 Budget for the fiscal year under section 706(c)(2) of 

17 the Social Security Act; plus 

18 ‘‘(B) the amount of the reduction in the total 

19 amount of expenditures which are chargeable to the 

20 Social Security Part A Account in the Social Secu21 rity Lockbox Budget for the fiscal year which is at22 tributable to adjustments to primary insurance 

23 amounts under section 215(j) of the Social Security 

24 Act. 

25 ‘‘(3)(A) For each fiscal year during the period begin26 ning with fiscal year 2005 and ending with fiscal year 
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1 2012, the national spending limitation shall be equal to 

2 the product derived by multiplying—

3 ‘‘(i) 20 percent of the GDP for the fiscal year 

4 for which the determination is made, by 

5 ‘‘(ii) 0.99, factored a number of times equal to 

6 the number of fiscal years during such period which 

7 end with or before the fiscal year for which the de8 termination is made. 

9 ‘‘(B) For each fiscal year during the period beginning 

10 with fiscal year 2013 and ending with fiscal year 2017, 

11 the national spending limitation shall be equal to— 

12 ‘‘(i) the amount of national spending limitation 

13 under this subsection for fiscal year 2012, increased 

14 by 

15 ‘‘(ii) the rate of growth in the GDP over the pe16 riod beginning with fiscal year 2013 and ending with 

17 the fiscal year for which the determination is made. 

18 ‘‘(C) For each fiscal year during the period beginning 

19 with fiscal year 2018 and ending with the termination 

20 year, the national spending limitation shall be equal to—

21 ‘‘(i) the amount of the national spending limita22 tion under this subsection for fiscal year 2018, in23 creased by 

24 ‘‘(ii) the sum of—
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1 ‘‘(I) the rate of growth in the GDP over 

2 the period beginning with fiscal year 2018 and 

3 ending with the fiscal year for which the deter4 mination is made, plus 

5 ‘‘(II) 1.75 percentage points for each fiscal 

6 year during the period described in subclause 

7 (I). 

8 ‘‘(D) Notwithstanding subparagraphs (B) and (C), in 

9 any case in which the OASDI trust fund ratio is less than 

10 125 percent as of the end of the fiscal year preceding each 

11 fiscal year during any period of 1 or more fiscal years re12 ferred to in such subparagraphs and preceding the termi13 nation year, the national spending limitation for each fis14 cal year during such period shall be the product of—

15 ‘‘(i) 20 percent of the GDP for the fiscal year 

16 for which the determination is made; and 

17 ‘‘(ii) 0.99, factored a number of times equal to 

18 the number of fiscal years during such period which 

19 end with or before the fiscal year for which the de20 termination is made plus the total number of fiscal 

21 years referred to in subparagraph (A), 

22 plus, if subparagraph (C) applied to the fiscal year pre23 ceding such period, the increase (if any) under subpara24 graph (C) in the national spending limitation for such fis25 cal year attributable to subparagraph (C)(ii)(II). 
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1 ‘‘(4) For purposes of this subsection, the term ‘termi2 nation year’ is the first fiscal year, after fiscal year 

3 2017—

4 ‘‘(A) for which the OASDI trust fund ratio is 

5 at least 125 percent; and 

6 ‘‘(B) on the last day of which there are no out7 standing transition obligations of the Self-Liqui8 dating Social Security Transition Fund under sec9 tion 6 of the Social Security Personal Savings Guar10 antee and Prosperity Act of 2004. 

11 ‘‘(5) For purposes of this subsection, the term ‘GDP’ 

12 means the gross domestic product, as projected by the De13 partment of Commerce.’’. 

14 SEC. 12. IMPOSITION OF SPENDING LIMITATIONS ON CON15 GRESSIONAL BUDGET RESOLUTIONS. 

16 (a) CONTENTS OF CONGRESSIONAL BUDGET RESO17 LUTIONS.—Section 301(a) of the Congressional Budget 

18 Act of 1974 is amended by adding at the end the following 

19 new sentence: ‘‘The concurrent resolution on the budget 

20 for fiscal year 2006 or for any ensuing fiscal year shall 

21 be consistent with the spending limitation specified in sec22 tion 1105(i) of title 31, United States Code.’’. 

23 (b) SPENDING LIMITATION POINT OF ORDER.—Sec24 tion 312 of the Congressional Budget Act of 1974 is 
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1 amended by adding at the end the following new sub2 section: 

3 ‘‘(g) SPENDING LIMITATION POINT OF ORDER.—(1) 

4 It shall not be in order in the House of Representatives 

5 or the Senate to consider any concurrent resolution on the 

6 budget for fiscal year 2006 or for any fiscal year there7 after, or any amendment thereto or conference report 

8 thereon, that is not consistent with the spending limitation 

9 specified in section 1105(i) of title 31, United States Code. 

10 ‘‘(2) Paragraph (1) may be waived or suspended in 

11 the House of Representatives or the Senate only by the 

12 affirmative vote of two-thirds of the Members, duly chosen 

13 and sworn. An affirmative vote of two-thirds of the Mem14 bers, duly chosen and sworn, shall be required in the Sen15 ate to sustain an appeal of the ruling of the chair on such 

16 point of order. Appeals in the Senate from the decisions 

17 of the chair relating to paragraph (1) shall be limited to 

18 one hour, to be equally divided between, and controlled 

19 by, the mover and the manager of the concurrent resolu20 tion.’’. 

21 SEC. 13. REDUCTION OF FICA RATES RESULTING FROM 

22 PERSONAL SOCIAL SECURITY SAVINGS PRO23 GRAM. 

24 (a) EMPLOYEE CONTRIBUTION.—Section 3101 of the 

25 Internal Revenue Code of 1986 (relating to tax on employ-
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1 ees) is amended by adding at the end the following new 

2 subsection: 

3 ‘‘(d) REDUCTION IN OLD-AGE, SURVIVORS, AND DIS4 ABILITY INSURANCE TAX RATE.—

5 ‘‘(1) IN GENERAL.—In any year which follows 

6 a reduction year and each year thereafter, the rate 

7 of tax imposed under subsection (a) shall be reduced 

8 by the reduction percentage. 

9 ‘‘(2) REDUCTION YEAR.—For purposes of this 

10 section—

11 ‘‘(A) IN GENERAL.—The term ‘reduction 

12 year’ means any year after the transition year 

13 in which the OASDI rate ratio exceeds 125 per14 cent. 

15 ‘‘(B) TRANSITION YEAR.—The term ‘tran16 sition year’ means the first full calendar year 

17 following the termination year (as defined in 

18 section 4(b)(2) of the Social Security Personal 

19 Savings Guarantee and Prosperity Act of 

20 2004). 

21 ‘‘(3) REDUCTION PERCENTAGE.—For purposes 

22 of this section, the term ‘reduction percentage’ 

23 means the excess of—

24 ‘‘(A) the rate in effect under subsection (a) 

25 for the reduction year, over 
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1 ‘‘(B) the rate (rounded up to the nearest 

2 one tenth of a percent) under which the OASDI 

3 rate ratio for the reduction year would have 

4 been 125 percent if—

5 ‘‘(i) such rate had been applicable 

6 under subsection (a) and section 3111(a) 

7 during such year, and 

8 ‘‘(ii) the rate under section 1401(a) 

9 during such year were twice such rate. 

10 ‘‘(4) OASDI RATE RATIO.—The term ‘OASDI 

11 rate ratio’ means, with respect to any calendar year, 

12 the ratio—

13 ‘‘(A) the numerator of which is the com14 bined balance in the Old-Age and Survivors In15 surance Trust Fund and the Federal Disability 

16 Insurance Trust Fund, as of the last day of 

17 such calendar year, and 

18 ‘‘(B) the denominator of which is the 

19 amount paid from such Trust Funds during 

20 such calendar year for all purposes authorized 

21 by section 201 of the Social Security Act (ex22 cluding any transfer payments between such 

23 Trust Funds and reducing the amount of any 

24 transfer to the Railroad Retirement Account by 
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1 the amount of any transfers into either such 

2 Trust Fund from such Account). 

3 ‘‘(5) LIMITATION ON REDUCTION.—Paragraph 

4 (1) shall not apply to any reduction to the extent 

5 that such reduction would cause the rate of tax im6 posed under subsection (a) to be less than 4.95 per7 cent.’’. 

8 (b) EMPLOYER CONTRIBUTION.—Section 3111 of the 

9 Internal Revenue Code of 1986 (relating to tax on employ10 ers) is amended by adding at the end the following new 

11 subsection: 

12 ‘‘(d) REDUCTION IN OLD-AGE, SURVIVORS, AND DIS13 ABILITY INSURANCE TAX RATE.—

14 ‘‘(1) IN GENERAL.—In any year which follows 

15 a reduction year and each year thereafter, the rate 

16 of tax imposed under subsection (a) shall be reduced 

17 by the reduction percentage. 

18 ‘‘(2) REDUCTION YEAR; REDUCTION PERCENT19 AGE.—For purposes of this section, the terms ‘re20 duction year’ and ‘reduction percentage’ have the 

21 meanings given such terms by section 3101(d). 

22 ‘‘(3) LIMITATION ON REDUCTION.—Paragraph 

23 (1) shall not apply to any reduction to the extent 

24 that such reduction would cause the rate of tax im-
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1 posed under subsection (a) to be less than 4.95 per2 cent.’’. 

3 (c) SELF-EMPLOYMENT CONTRIBUTION.—Section 

4 1401 of the Internal Revenue Code of 1986 (relating to 

5 tax on self-employment income) is amended by adding at 

6 the end the following new subsection: 

7 ‘‘(d) REDUCTION IN OLD-AGE, SURVIVORS, AND DIS8 ABILITY INSURANCE TAX RATE.—

9 ‘‘(1) IN GENERAL.—In any year which follows 

10 a reduction year and each year thereafter, the rate 

11 of tax imposed under subsection (a) shall be reduced 

12 by the reduction percentage. 

13 ‘‘(2) REDUCTION YEAR; REDUCTION PERCENT14 AGE.—For purposes of this section, the terms ‘re15 duction year’ and ‘reduction percentage’ have the 

16 meanings given such terms by section 3101(d). 

17 ‘‘(3) LIMITATION ON REDUCTION.—Paragraph 

18 (1) shall not apply to any reduction to the extent 

19 that such reduction would cause the rate of tax im20 posed under subsection (a) to be less than 9.9 per21 cent.’’.

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