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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2889 Introduced in House (IH)]

112th CONGRESS
  1st Session
                                H. R. 2889

 To reform Social Security by establishing a Personal Social Security 
                            Savings Program.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           September 12, 2011

 Mr. McCotter introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL

 
 To reform Social Security by establishing a Personal Social Security 
                            Savings Program.

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Save Social 
Security Act''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title and table of contents.
Sec. 2. Establishment of Personal Social Security Savings Program.
           ``Part B--Personal Social Security Savings Program

        ``Sec. 251. Definitions.
        ``Sec. 252. Personal Social Security Savings Fund.
        ``Sec. 253. Participation in program and establishment of 
                            personal social security savings accounts.
        ``Sec. 254. Contributions to the Savings Fund.
        ``Sec. 255. Tier I Investment Fund.
        ``Sec. 256. Tier II Investment Options.
        ``Sec. 257. Personal social security savings annuity and other 
                            distributions.
        ``Sec. 258. Guarantee of promised social security benefits.
        ``Sec. 259. Personal Social Security Savings Board.
        ``Sec. 260. Executive Director.
Sec. 3. Monthly insurance benefits in connection with participants in 
                            the Personal Social Security Savings 
                            Program.
Sec. 4. Tax treatment of accounts.
Sec. 5. Reimbursement of Spending Reduction Account from savings 
                            resulting from Personal Social Security 
                            Savings Program.
Sec. 6. Funding of Personal Social Security Savings Program from 
                            Credits for Reductions in Federal Spending.
Sec. 7. Interim financing of the Social Security Trust Funds.

SEC. 2. ESTABLISHMENT OF PERSONAL SOCIAL SECURITY SAVINGS PROGRAM.

    Title II of the Social Security Act is amended--
            (1) by inserting before section 201 the following:

                    ``PART A--INSURANCE BENEFITS'';

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

           ``PART B--PERSONAL SOCIAL SECURITY SAVINGS PROGRAM

``SEC. 251. DEFINITIONS.

    ``For purposes of this part--
            ``(1) Qualifying individual.--The term `qualifying 
        individual' means any individual--
                    ``(A) who is born on or after January 1, 1961, and
                    ``(B)(i) who receives wages in any calendar year 
                after December 31, 2010, on which there is imposed a 
                tax under section 3101(a) of the Internal Revenue Code 
                of 1986, or
                    ``(ii) who derives self-employment income for a 
                taxable year beginning after December 31, 2010, on 
                which there is imposed a tax under section 1401(a) of 
                such Code.
            ``(2) Participant.--The term `participant' means a 
        qualifying individual who has elected under section 253(a) to 
        participate in the program established under this part.
            ``(3) Board.--The term `Board' means the Personal Social 
        Security Savings Board established under section 259.
            ``(4) Executive director.--The term `Executive Director' 
        means the Executive Director appointed under section 260.
            ``(5) Personal social security savings account.--The term 
        `personal social security savings account' means an account 
        established under section 253(b).
            ``(6) Personal social security savings annuity.--The term 
        `personal social security savings annuity' means an annuity 
        offered by the Annuity Issuance Authority under section 257.
            ``(7) Savings fund.--The term `Savings Fund' means the 
        Personal Social Security Savings Fund established under section 
        252.
            ``(8) Tier i investment fund.--The term `Tier I Investment 
        Fund' means the fund created under section 255.
            ``(9) Tier ii investment option.--The term `Tier II 
        Investment Option' means an investment option which is--
                    ``(A) offered by an eligible entity certified by 
                the Board under section 256(b); and
                    ``(B) approved by the Board under section 256(d).

``SEC. 252. PERSONAL SOCIAL SECURITY SAVINGS FUND.

    ``(a) Establishment of Savings Fund.--
            ``(1) Establishment.--There is established in the Treasury 
        of the United States a trust fund to be known as the `Personal 
        Social Security Savings Fund'.
            ``(2) Amounts in fund.--The Savings Fund shall consist of--
                    ``(A) all amounts contributed to the Savings Fund 
                under section 254, increased by the total net earnings 
                from investments of sums in the Savings Fund 
                attributable to such contributed amounts, and reduced 
                by the total net losses from investments of such sums, 
                and
                    ``(B) the reserves held in the Annuity Reserves 
                Account established under section 257(b)(3), increased 
                by the total net earnings from investments of such 
                reserves, and reduced by the total net losses from 
                investments of such reserves.
            ``(3) Trustees.--The Board shall serve as trustees of the 
        Savings Fund.
            ``(4) Budget authority; appropriation.--This part 
        constitutes budget authority in advance of appropriations Acts 
        and represents the obligation of the Board to provide for the 
        payment of amounts provided under this part. The amounts held 
        in the Savings Fund are appropriated and shall remain available 
        without fiscal year limitation.
    ``(b) Availability.--The sums in the Savings Fund are appropriated 
and shall remain available without fiscal year limitation--
            ``(1) to invest funds in the Tier I Investment Fund of the 
        Savings Fund under section 255;
            ``(2) to transfer funds in the Tier I Investment Fund into 
        Tier II Investment Options under section 256;
            ``(3) to make distributions in accordance with section 257; 
        and
            ``(4) to pay the administrative expenses of the Board in 
        accordance with subsection (d).
    ``(c) Limitations on Use of Funds.--
            ``(1) In general.--Sums in the Savings Fund credited to a 
        participant's personal social security savings account under 
        section 255(a)(1)(3) may not be used for, or diverted to, 
        purposes other than for the exclusive benefit of the 
        participant or the participant's beneficiaries under this part.
            ``(2) Assignments.--Sums in the Savings Fund may not be 
        assigned or alienated and are not subject to execution, levy, 
        attachment, garnishment, or other legal process.
    ``(d) Payment of Administrative Expenses.--Administrative expenses 
incurred to carry out this part shall be paid out of net earnings in 
the Savings Fund in conjunction with the allocation of investment 
earnings and losses under section 253(d).
    ``(e) Limitation.--The sums in the Savings Fund shall not be 
appropriated for any purpose other than the purposes specified in this 
part and may not be used for any other purpose.

``SEC. 253. PARTICIPATION IN PROGRAM AND ESTABLISHMENT OF PERSONAL 
              SOCIAL SECURITY SAVINGS ACCOUNTS.

    ``(a) Participation.--A qualifying individual may, at any time on 
or after January 1, 2012, elect, in such form and manner as shall be 
prescribed by the Board, to be a participant in the program established 
under this part. The Board shall certify to the Executive Director that 
the qualifying individual is a participant in the program. An election 
under this subsection shall be irrevocable.
    ``(b) Establishment of Publicly Administered System of Personal 
Security Savings Accounts.--Upon receipt of the certification that a 
qualifying individual is a participant in the program established under 
this part, the Executive Director shall establish a personal social 
security savings account for such participant. Such account shall be 
the means by which amounts contributed to the Savings Fund under 
section 254 and held in the Tier I Investment Fund of the Savings Fund 
under section 255 or under Tier II Investment Options under section 256 
are credited to the participant, under procedures which shall be 
established by the Board by regulation. Each account of a participant 
shall be identified to the participant by means of the participant's 
social security account number.
    ``(c) Account Balance.--The balance in a participant's account at 
any time is the sum of--
            ``(1) the excess of--
                    ``(A) all deposits in the Tier I Investment Fund of 
                the Savings Fund credited to such participant's 
                personal social security savings account, subject to 
                such increases and reductions as may result from 
                allocations made to and reductions made in the account 
                pursuant to subsection (d); over
                    ``(B) amounts paid out of the Tier I Investment 
                Fund in connection with amounts credited to such 
                participant's personal social security savings account; 
                plus
            ``(2) the excess of--
                    ``(A) the deposits in the Tier II Investment 
                Options credited to such participant's personal social 
                security savings account, subject to such increases and 
                reductions as may result from amounts credited to, and 
                reductions made in, the account pursuant to subsection 
                (d)(2); over
                    ``(B) amounts paid out of the Tier II Investment 
                Options of such participant.
The calculation made under paragraph (2) shall be made separately for 
each Tier II Investment Option of the participant.
    ``(d) Allocation of Earnings and Losses.--Pursuant to regulations 
which shall be prescribed by the Board, the Executive Director shall 
allocate to each personal social security savings account an amount 
equal to the net earnings and net losses from each investment of sums--
            ``(1) in the Tier I Investment Fund which are attributable 
        to sums credited to such account reduced by an appropriate 
        share of the administrative expenses paid out of the net 
        earnings, as determined by the Executive Director; and
            ``(2) in the Tier II Investment Options which are 
        attributable to sums credited to such account reduced by the 
        administrative expenses paid out of the net earnings.

``SEC. 254. CONTRIBUTIONS TO THE SAVINGS FUND.

    ``(a) Form and Manner of Contributions.--
            ``(1) Determination and certification of contribution 
        amounts.--In the case of each qualifying individual who becomes 
        a participant pursuant to an election made under section 253, 
        the Executive Director shall--
                    ``(A) prior to the first calendar quarter beginning 
                after the effective date of the election, determine the 
                contribution amount with respect to the participant 
                under subsection (b) for the calendar year in which 
                such quarter occurs and certify such amount to the 
                Secretary of the Treasury, and
                    ``(B) prior to each calendar year commencing after 
                the effective date of the election, determine the 
                contribution amount with respect to the participant 
                under subsection (b) for such calendar year and certify 
                such amount to the Secretary of the Treasury.
            ``(2) Transfer of contribution amounts to savings fund.--
        Upon receipt of a certification of a contribution amount for 
        any calendar year under paragraph (1), the Secretary of the 
        Treasury shall, before the end of each calendar quarter 
        beginning during such calendar year and after the date of such 
        certification, transfer 25 percent of such amount from amounts 
        in the general fund of the Treasury (subject to section 6 of 
        the Personal Social Security Savings Guarantee and Prosperity 
        Act of 2011).
    ``(b) Amount of Contribution.--
            ``(1) In general.--The contribution amount for any calendar 
        year under subsection (a) with respect to a participant shall 
        be equal to the sum of--
                    ``(A) the product derived by multiplying--
                            ``(i) the sum of the total wages paid to, 
                        and self-employment income derived by, the 
                        participant which are creditable by the 
                        Commissioner of Social Security to the 
                        preceding calendar year, to the extent such 
                        total wages and self-employment income do not 
                        exceed the base amount for such preceding 
                        calendar year, by
                            ``(ii) 5 percent, and
                    ``(B) the product derived by multiplying--
                            ``(i) the sum of the total wages paid to, 
                        and self-employment income derived by, the 
                        participant which are creditable by the 
                        Commissioner to such preceding calendar year, 
                        to the extent such total wages and self-
                        employment income exceed the base amount for 
                        such preceding calendar year but do not exceed 
                        the contribution and benefit base (determined 
                        under section 230) for such preceding calendar 
                        year, by
                            ``(ii) 2.5 percent.
            ``(2) Base amount.--For purposes of paragraph (1)--
                    ``(A) Initial base amount.--The base amount for 
                calendar years 2011 and 2012 is $10,000.
                    ``(B) Adjustments to base amount.--The base amount 
                for any calendar year after 2012 is the product derived 
                by multiplying $10,000 by a fraction--
                            ``(i) the numerator of which is the 
                        national average wage index (as defined in 
                        section 209(k)) for the first of the 2 
                        preceding calendar years, and
                            ``(ii) the denominator of which is the 
                        national average wage index (as so defined) for 
                        2010,
                except that any such product that is not a multiple of 
                $10.00 shall be rounded to the next lower multiple of 
                $10.00.
            ``(3) Determination and treatment of excess 
        contributions.--The amount of contributions for a participant 
        for a calendar year shall be determined on the basis of 
        estimates, made by the Commissioner of Social Security and 
        certified to the Executive Director, of the wages paid to, and 
        self-employment income derived by, the participant for the 
        preceding calendar year. Proper adjustments shall be made in 
        the maximum amount for subsequent calendar years to the extent 
        prior estimates were in excess of or were less than actual 
        amounts, except that the Executive Director may, as determined 
        appropriate by the Executive Director, provide for refunds to 
        the Treasury of amounts contributed in excess of the maximum 
        amount in lieu of such adjustments. Estimates and adjustments 
        made pursuant to this paragraph shall be communicated by the 
        Executive Director to the Secretary of the Treasury in such 
        timely manner as to allow, to the greatest extent practicable, 
        for contributions to the Savings Fund which do not exceed the 
        proper amount.

``SEC. 255. TIER I INVESTMENT FUND.

    ``(a) Establishment of Tier I Investment Fund.--
            ``(1) In general.--The Savings Fund shall include a 
        separate fund to be known as the `Tier I Investment Fund'.
            ``(2) Amounts in fund.--The Tier I Investment Fund consists 
        of all amounts derived from contributions made to the Fund 
        under section 254 and remaining after investment of such 
        amounts under subsection (b), including additional amounts 
        derived as income from such investments.
            ``(3) Separate crediting to personal social security 
        savings accounts.--
                    ``(A) In general.--Subject to this subsection, the 
                Board shall provide for prompt, separate crediting of 
                the amounts deposited in the Tier I Investment Fund to 
                the personal social security savings account of each 
                participant to the extent such amount consists of 
                contributions made to the Savings Fund under section 
                254 with respect to such participant, together with any 
                increases or decreases therein so as to reflect the net 
                returns and losses from investment thereof while held 
                in the Fund.
                    ``(B) Treatment of married participants.--If the 
                participant is married as of the end of the calendar 
                year in which the amounts to be credited were deposited 
                in the Tier I Investment Fund and the spouse is also a 
                participant, the personal social security savings 
                account of the participant and the personal social 
                security savings account of his or her spouse shall 
                each be credited with 50 percent of such amounts.
            ``(4) Use of funds.--The amounts held in the Fund are 
        appropriated and shall remain available without fiscal year 
        limitation--
                    ``(A) to be held for investment under subsection 
                (b),
                    ``(B) to pay the administrative expenses related to 
                the Fund, and
                    ``(C) to make transfers to Tier II Investment 
                Options under section 256 or to make payments under 
                section 257.
    ``(b) Investment Guidelines.--
            ``(1) In general.--For purposes of investment of amounts 
        credited to each personal social security savings account, the 
        Board shall provide by regulation for 3 investment options. 
        Such options shall consist of the 90/10 investment option, the 
        70/30 investment option, the 50/50 investment option, and the 
        lifecycle investment option.
            ``(2) Alternative investment options.--
                    ``(A) The 90/10 investment option.--Under the 90/10 
                investment option, amounts credited to the 
                participant's personal social security savings account 
                are held in the Tier I Investment Fund so as to ensure, 
                to the maximum extent practicable, that, of the total 
                balance credited to the account and available for 
                investment (after allowing for administrative 
                expenses)--
                            ``(i) 90 percent is invested in common 
                        stock as provided in paragraph (4), and
                            ``(ii) 10 percent is invested in fixed 
                        income securities as provided in paragraph (5).
                For such purpose, certified account managers shall 
                offer the participant a choice of one or more 
                portfolios of each such type of investment.
                    ``(B) The 70/30 investment option.--Under the 70/30 
                investment option, amounts credited to the 
                participant's personal social security savings account 
                are held in the Tier I Investment Fund so as to ensure, 
                to the maximum extent practicable, that, of the total 
                balance credited to the account and available for 
                investment (after allowing for administrative 
                expenses)--
                            ``(i) 70 percent is invested in common 
                        stock as provided in paragraph (4), and
                            ``(ii) 30 percent is invested in fixed 
                        income securities as provided in paragraph (5).
                For such purpose, certified account managers shall 
                offer the participant a choice of one or more 
                portfolios of each such type of investment.
                    ``(C) The 50/50 investment option.--Under the 50/50 
                investment option, amounts credited to the 
                participant's personal social security savings account 
                are held in the Tier I Investment Fund so as to ensure, 
                to the maximum extent practicable, that, of the total 
                balance credited to the account and available for 
                investment (after allowing for administrative 
                expenses)--
                            ``(i) 50 percent is invested in common 
                        stock as provided in paragraph (4), and
                            ``(ii) 50 percent is invested in fixed 
                        income securities as provided in paragraph (5).
                For such purpose, certified account managers shall 
                offer the participant a choice of one or more 
                portfolios of each such type of investment.
                    ``(D) Lifecycle investment option.--
                            ``(i) In general.--Under the lifecycle 
                        investment option, amounts credited to the 
                        participant's personal social security savings 
                        account are held in the Tier I Investment Fund 
                        so as to ensure, to the maximum extent 
                        practicable, that the total balance credited to 
                        the account and available for investment (after 
                        allowing for administrative expenses) shall be 
                        invested over time, under regulations which 
                        shall be prescribed by the Board, in a mix of 
                        common stock and fixed income securities 
                        according to the each of the investment options 
                        described in subparagraphs (A), (B), and (C) so 
                        as to ensure, to the maximum extent 
                        practicable, that the percentage invested in 
                        fixed income securities by individuals in 
                        designated cohorts, ranging in age up to those 
                        of at least retirement age, will increase from 
                        10 percent to 50 percent as the cohort 
                        approaches retirement age.
                            ``(ii) Default option.--Except as provided 
                        in an election under paragraph (3), amounts 
                        credited to the participant's personal social 
                        security savings account and held in the Tier I 
                        Investment Fund shall be invested as provided 
                        in clause (i).
            ``(3) Elections among investment options.--Pursuant to any 
        individual's election filed in accordance with regulations of 
        the Board during annual open seasons specified in such 
        regulations, the Executive Director shall, in accordance with 
        such regulations, provide for disinvestment and reinvestment of 
        amounts credited to the participant's personal social security 
        savings account and held in the Tier I Investment Fund under 
        any of the investment options described in paragraph (2) so as 
        to provide for investment of amounts credited to the account in 
        any of the other such investment options specified in such 
        election.
            ``(4) Common stock index requirements.--The Board shall 
        establish by regulation standards which must be met by any 
        portfolio of common stock selected for investment as provided 
        in subparagraph (A)(i), (B)(i), (C)(i), or (D) of paragraph 
        (2). Amounts invested in common stock under an investment 
        option shall be held in a portfolio designed to replicate the 
        performance of one or more of indices comprised of common stock 
        the aggregate market value of which is, in each case, a 
        reasonably broad representation of publicly held companies 
        whose shares are traded on the equity markets.
            ``(5) Fixed income securities requirements.--The Board 
        shall establish by regulation standards which must be met by 
        fixed income securities selected for investment as provided in 
        subparagraph (A)(ii), (B)(ii), (C)(ii), or (D) of paragraph 
        (2). The amounts invested in fixed income securities shall be 
        held in a portfolio which shall consist of a diverse range of 
        high-grade corporate bonds, taking into full account the 
        opposing considerations of risk and maximization of return.
    ``(c) Annual Description of Tier I Investment Options and 
Disclosure of Administrative Costs.--The Board shall provide annually 
to each participant--
            ``(1) a description of the investment options available 
        with respect to amounts held in the Tier I Investment Fund and 
        the procedures for selecting such options; and
            ``(2) a disclosure of the rate of administrative costs 
        chargeable with respect to each investment option.
Descriptions and disclosures required under this subsection shall be 
written in a manner calculated to be understood by the average 
participant.
    ``(d) Treatment of Amounts Held in Tier I Investment Fund.--Subject 
to this part, amounts deposited into, and held and accounted for in, 
the Tier I Investment Fund with respect to any participant shall be 
treated as property of such participant, held in trust for such 
participant in the Fund.

``SEC. 256. TIER II INVESTMENT OPTIONS.

    ``(a) Election of Tier II Investment Options.--
            ``(1) In general.--A participant may elect to direct 
        transfers from amounts in the Savings Fund credited to the 
        personal social security savings account of such individual 
        into 1 or more Tier II Investment Options in accordance with 
        paragraph (2).
            ``(2) Commencement of tier ii investment options upon 
        attainment of election threshold.--In any case in which, as of 
        the end of any calendar year, the total balance in the Savings 
        Fund credited to a participant's personal social security 
        savings account exceeds for the first time the election 
        threshold, the Board shall, by regulation, provide for an 
        opportunity for such participant to make, at any time 
        thereafter, such individual's first election of one or more of 
        the Tier II Investment Options for investment of an amount in 
        the Savings Fund credited to such account. Such election may be 
        in lieu of or in addition to investment in the options 
        available with respect to the Tier I Investment Fund of the 
        Savings Fund.
            ``(3) Allocation of funds.--In the case of an election 
        under paragraph (1), funds credited to the personal social 
        security savings account of the participant and elected for 
        transfer to one or more Tier II Investment Options shall be 
        transferred to the Tier II Investment Options so elected for 
        such calendar year, in percentages specified in the election by 
        the participant for each Tier II Investment Option.
            ``(4) Election threshold.--
                    ``(A) In general.--Subject to subparagraph (B), for 
                purposes of this subsection the term `election 
                threshold' means an amount equal to $25,000.
                    ``(B) Adjustments.--The Board shall adjust annually 
                (effective for annual reporting months occurring after 
                December 2012) the dollar amount set forth in 
                subparagraph (A) under procedures providing for 
                adjustments in the same manner and to the same extent 
                as adjustments are provided for under the procedures 
                used to adjust benefit amounts under section 
                215(i)(2)(A), except that any amount so adjusted that 
                is not a multiple of $1.00 shall be rounded to the 
                nearest multiple of $1.00.
            ``(5) Subsequent investment of amounts held in tier ii 
        investment options.--Any amounts held in one or more Tier II 
        Investment Options may be--
                    ``(A) transferred at any time to one or more other 
                Tier II Investment Options offered by the same or 
                different eligible entities, subject to applicable 
                regulations of the Board and the terms governing the 
                affected Tier II Investment Options, and
                    ``(B) transferred, not more frequently than 
                annually, to the Tier I Investment Fund, for deposit in 
                the applicable investment account then selected by the 
                participant under section 255.
    ``(b) Certification of Eligible Entities.--
            ``(1) In general.--The Board shall certify eligible 
        entities to offer Tier II Investment Options under this part.
            ``(2) Application.--Any eligible entity that desires to be 
        certified by the Board to offer a Tier II Investment Option 
        shall submit an application to the Board at such time, in such 
        manner, and containing such information as the Board may 
        require.
            ``(3) Requirements for approval.--The Board shall not 
        certify an eligible entity unless such eligible entity agrees 
        to the following requirements:
                    ``(A) Recordkeeping.--Each eligible entity shall, 
                with respect to each Tier II Investment Option offered 
                by such eligible entity to participants, comply with 
                standards which shall be prescribed by the Board to 
                maintain accurate crediting of the interest of each 
                participant in the Option to that participant's 
                personal social security savings account.
                    ``(B) Treatment of amounts held in fund.--Amounts 
                deposited into, and held and accounted for in, a Tier 
                II Investment Option with respect to any participant 
                shall be treated as property of such participant, held 
                in trust for such participant.
                    ``(C) Trust requirements.--Amounts held and 
                accounted for with respect to a participant shall be 
                held in a trust created or organized in the United 
                States for the exclusive benefit of such participant or 
                his or her beneficiaries.
                    ``(D) Exemption from third party claims.--Each Tier 
                II Investment Option shall be exempt from any and all 
                third party claims against the eligible entity.
                    ``(E) Disclosure of administrative costs.--Each 
                eligible entity offering a Tier II Investment Option 
                under this section shall provide to each participant an 
                annual disclosure of the rate of administrative costs 
                chargeable with respect to investment in such Option. 
                Such disclosure shall be written in a manner calculated 
                to be understood by the average participant. The Board 
                shall provide for coordination of disclosures with 
                respect to Tier II Investment Options under this 
                subparagraph so as to assist participants in comparing 
                alternative Options based on administrative costs.
                    ``(F) Annual description of tier ii investment 
                options and disclosure of administrative costs.--
                            ``(i) Disclosures to the board.--Each 
                        eligible entity offering a Tier II Investment 
                        Option under this section shall, in accordance 
                        with regulations of the Board, provide to the 
                        Board an annual disclosure of the Tier II 
                        Investment Options then currently available 
                        with respect to amounts credited to personal 
                        social security savings accounts under this 
                        part, the procedures in effect in the case of 
                        such eligible entity for selecting such 
                        Options, and the rate of administrative costs 
                        chargeable with respect to investment in each 
                        such Option.
                            ``(ii) Annual notices to participants.--The 
                        Board shall provide annually to each 
                        participant a notice setting forth--
                                    ``(I) a description of the Tier II 
                                Investment Options available with 
                                respect to amounts credited to the 
                                participant's personal social security 
                                savings account and the procedures for 
                                selecting such Options; and
                                    ``(II) a disclosure of the rate of 
                                administrative costs chargeable with 
                                respect to each such Option.
                        Descriptions and disclosures required under 
                        this clause shall be written in a manner 
                        calculated to be understood by the average 
                        participant.
                    ``(G) Reporting to the executive director and the 
                board.--Each eligible entity shall provide reports to 
                the Executive Director and the Board at such time, in 
                such manner, and containing such information as the 
                Board may require.
            ``(4) Eligible entity defined.--For purposes of this 
        section, the term `eligible entity' means any investment 
        company (as defined in section 3 of the Investment Company Act 
        of 1940) or other person that the Board determines appropriate 
        to offer Tier II Investment Options under this part.
    ``(c) Tier II Investment Options.--
            ``(1) In general.--For purposes of investment of amounts 
        credited to each personal social security savings account, the 
        Board shall provide by regulation for investment in any of 3 
        alternative Tier II Investment Options which may be offered by 
        any eligible entity. Any such option shall consist of a less 
        conservative investment option, a moderate investment option, 
        or a more conservative investment option.
            ``(2) Alternative tier ii investment options.--
                    ``(A) Less conservative investment options.--Under 
                a less conservative investment option, amounts credited 
                to the participant's personal social security savings 
                account are held by the eligible entity so as to 
                ensure, to the maximum extent practicable, that, of the 
                total balance credited to the account and available for 
                investment (after allowing for administrative 
                expenses)--
                            ``(i) at least 85 percent but not more than 
                        95 percent is invested in common stock, and
                            ``(ii) the remainder is invested in fixed 
                        income securities.
                For such purpose, the eligible entity shall offer the 
                participant a choice of one or more portfolios of each 
                such type of investment.
                    ``(B) Moderate investment options.--Under a 
                moderate investment option, amounts credited to the 
                participant's personal social security savings account 
                are held by the eligible entity so as to ensure, to the 
                maximum extent practicable, that, of the total balance 
                credited to the account and available for investment 
                (after allowing for administrative expenses)--
                            ``(i) at least 65 percent but less than 75 
                        percent is invested in common stock, and
                            ``(ii) the remainder is invested in fixed 
                        income securities.
                For such purpose, the eligible entity shall offer the 
                participant a choice of one or more portfolios of each 
                such type of investment.
                    ``(C) More conservative investment options.--Under 
                a more conservative investment option, amounts credited 
                to the participant's personal social security savings 
                account are held by the eligible entity so as to 
                ensure, to the maximum extent practicable, that, of the 
                total balance credited to the account and available for 
                investment (after allowing for administrative 
                expenses)--
                            ``(i) at least 45 percent but less than 55 
                        percent is invested in common stock, and
                            ``(ii) the remainder is invested in fixed 
                        income securities.
                For such purpose, the eligible entity shall offer the 
                participant a choice of one or more portfolios of each 
                such type of investment.
            ``(3) Elections among investment options.--Pursuant to the 
        participant's election filed in accordance with regulations of 
        the Board, and subject to the terms of the investment options 
        described in paragraph (2) offered to the participant by the 
        eligible entity and approved by the Board, the eligible entity 
        offering any such investment option shall, in accordance with 
        such regulations, provide for disinvestment and reinvestment of 
        amounts credited to the participant's personal social security 
        savings account and held by the eligible entity in such 
        investment option so as to provide for investment of amounts 
        credited to the account in any of the other such investment 
        options specified in such election.
    ``(d) Approval of Tier II Investment Options.--
            ``(1) In general.--No funds may be transferred into a Tier 
        II Investment Option unless the Board has approved an 
        application submitted under paragraph (2) with respect to the 
        option.
            ``(2) Application.--With respect to each Tier II Investment 
        Option that an eligible entity certified under subsection 
        (b)(1) seeks to offer, such entity shall submit an application 
        to the Board at such time, in such manner, and containing such 
        information as the Board may require.
            ``(3) Qualifications for approval.--The Board may not 
        approve an application submitted under paragraph (2) in 
        connection with a Tier II Investment Option unless the 
        following requirements are met:
                    ``(A) Option must be offered by certified eligible 
                entity.--The Tier II Investment Option is offered by an 
                eligible entity certified under subsection (b).
                    ``(B) Option must meet quality factors.--
                            ``(i) In general.--The Tier II Investment 
                        Option meets qualifications which shall be 
                        prescribed by the Board relating to the quality 
                        factors described in clause (ii).
                            ``(ii) Quality factors.--The quality 
                        factors described in this clause are--
                                    ``(I) the safety and soundness of 
                                the Tier II Investment Option's 
                                proposed investment policy;
                                    ``(II) the experience and record of 
                                performance of the proposed Option, if 
                                any;
                                    ``(III) the experience and record 
                                of performance of the entity issuing or 
                                offering such Option; and
                                    ``(IV) such other factors as the 
                                Board may determine appropriate.
    ``(e) Considerations for Certification and Approval.--In 
determining whether to certify an eligible entity under subsection (b) 
or to approve a Tier II Investment Option under subsection (d), the 
Board shall--
            ``(1) act in the best interests of the participants;
            ``(2) base its determination solely on considerations of 
        balancing safety and soundness of the Tier II Investment Option 
        with the maximization of returns of such option;
            ``(3) give equal consideration to options offered by 
        variously-sized banks (as defined in section 581 of the 
        Internal Revenue Code of 1986) or insured credit unions (within 
        the meaning of section 101(7) of the Federal Credit Union Act, 
        12 U.S.C. 1752(7)) located in the United States; and
            ``(4) not base any determination related to the entity or 
        option on political or other extraneous considerations.
    ``(f) Sponsorship of Tier II Investment Options by Membership and 
Labor Organizations.--
            ``(1) In general.--A membership or labor organization (as 
        defined by the Board) may sponsor Tier II Investment Options 
        under contracts with eligible entities certified under 
        subsection (b) who shall administer the investment option if 
        such investment option is approved by the Board under 
        subsection (c).
            ``(2) Limitation to membership.--A membership or labor 
        organization (as so defined) may limit to the members of such 
        organization participation in a Tier II Investment Option 
        sponsored by such organization.
    ``(g) Distributions in Case of Death.--Upon the death of a 
participant, the amount of any assets held under a Tier II Investment 
Option credited to the personal social security savings account of such 
individual shall be distributed in accordance with section 257(e).

``SEC. 257. PERSONAL SOCIAL SECURITY SAVINGS ANNUITY AND OTHER 
              DISTRIBUTIONS.

    ``(a) Date of Initial Distribution.--Except as provided in 
subsection (e), distributions may be made to a participant from amounts 
credited to the personal social security savings account of such 
individual only on or after the date the participant attains retirement 
age (as defined in section 216(l)(1)) or, if elected by the 
participant, the early retirement age (as defined in section 216(l)(2)) 
applicable for old-age insurance benefits.
    ``(b) Personal Social Security Savings Annuities.--
            ``(1) Notice of available annuities.--Not later than the 
        date determined under subsection (a), the Board shall notify 
        each participant of--
                    ``(A) the most recent listing of personal social 
                security savings annuities offered by the Annuity 
                Issuance Authority under paragraph (2); and
                    ``(B) the entitlement of the participant to 
                purchase such an annuity.
            ``(2) Annuity issuance authority.--There is established in 
        the office of the Board an agency which shall be known as the 
        `Annuity Issuance Authority'. The Authority shall provide, in 
        accordance with regulations of the Board, for the issuance of 
        personal social security savings annuities for purchase from 
        the Authority under this section and to otherwise administer 
        the issuance of such annuities in accordance with such 
        regulations.
            ``(3) Annuity reserves account.--There is established in 
        the Savings Fund an Annuity Reserves Account. The Account shall 
        consist of all amounts received by the Authority from the 
        purchase of personal social security savings annuities under 
        this section (plus such amounts as may be transferred to the 
        Account under paragraph (5)(B)), increased by the total net 
        earnings from investments of such reserves under subparagraph 
        (A) of paragraph (5) and reduced by the total net losses from 
        investments of such reserves under such subparagraph.
            ``(4) Purchase of annuities.--
                    ``(A) Selection of annuity.--On a date elected by 
                the participant, but no earlier than the date 
                determined under subsection (a), a participant may 
                purchase a personal social security savings annuity 
                selected from among the annuities offered by the 
                Authority under paragraph (2).
                    ``(B) Transfer of assets.--Upon the selection of an 
                annuity by a participant under subparagraph (A), the 
                Board shall provide for the transfer of assets, 
                credited to the personal social security savings 
                account of the participant and held in the Tier I 
                Investment Fund or under 1 or more Tier II Investment 
                Options (or any combination thereof), in a total amount 
                sufficient to purchase the annuity selected by the 
                participant from annuities offered by the Authority.
                    ``(C) Minimum annuity payment amount.--
                            ``(i) In general.--Subject to subparagraph 
                        (D), if, at the time a personal social security 
                        savings annuity is purchased under subparagraph 
                        (A), the assets credited to the personal social 
                        security savings account of the participant are 
                        sufficient to purchase a personal social 
                        security savings annuity offered by the 
                        Authority under paragraph (2) with a monthly 
                        annuity payment that is at least equal to the 
                        minimum annuity payment amount, the amount of 
                        the monthly annuity payment provided by such 
                        annuity may not be less than the minimum 
                        annuity payment amount.
                            ``(ii) Construction.--Nothing in this 
                        subparagraph shall be construed to prohibit a 
                        participant from using personal social security 
                        savings account assets to purchase a personal 
                        social security savings annuity offered by the 
                        Authority under paragraph (2) which provides 
                        for a monthly payment in excess of the minimum 
                        amount required under clause (i).
                            ``(iii) Minimum annuity payment amount 
                        defined.--For purposes of this part, the term 
                        `minimum annuity payment amount' means, as of 
                        any date, an amount equal to one-half of the 
                        old-age insurance benefit under section 202(a) 
                        of a participant under part B and any other 
                        monthly insurance benefit under such section 
                        based on the participant's wages and self-
                        employment income (as determined before 
                        applying any reduction or deduction otherwise 
                        applicable under this title and without regard 
                        to subsection (z)).
                            ``(iv) Assumptions.--For purposes of making 
                        actuarial determinations relating to the 
                        amounts of annuities offered by the Authority 
                        under this section and the amounts necessary 
                        for the purchase of such annuities, the 
                        Authority shall project returns from the 
                        investment, in accordance with paragraph 
                        (5)(A), of the reserves held in the Annuities 
                        Reserves Account. The projection by the 
                        Authority of such returns shall be made under 
                        assumptions of long-term average returns of 
                        equities and fixed income instruments which 
                        shall be issued annually by the Board of 
                        Trustees of the Federal Old-Age and Survivors 
                        Insurance Trust Fund and the Federal Disability 
                        Insurance Trust Fund, based on analysis of 
                        historical market returns.
                    ``(D) Purchase of annuities in the event of 
                insufficient assets.--If, as of the date determined 
                under subsection (a), the assets credited to a 
                participant's personal social security savings account 
                are insufficient to purchase a personal social security 
                savings annuity that provides for a monthly payment 
                that is at least equal to the minimum annuity payment 
                amount (as defined in paragraph (4)(C)(iii)), the 
                participant may purchase a personal social security 
                savings annuity with a monthly payment equal to the 
                maximum amount that the participant's personal social 
                security savings account can fund, as determined in 
                accordance with regulations which shall be prescribed 
                by the Authority, and that otherwise meets the 
                requirements of this subsection (including the cost-of-
                living protection requirement of subsection (c)(1)(C)).
            ``(5) Investment of reserves for payment of annuities.--For 
        purposes of investment of reserves held in the Annuity Reserves 
        Account, the Authority shall contract with appropriate 
        investment managers, recordkeepers, and custodians selected by 
        the Authority for investment of such reserves. Such reserves 
        shall be invested under regulations which shall be prescribed 
        by the Authority so as to ensure, to the maximum extent 
        practicable, that, of the total balance of the reserves (after 
        payment of administrative expenses to such managers, 
        recordkeepers, and custodians)--
                    ``(A) 65 percent is invested in equities in the 
                same manner and under the same standards as are 
                provided in section 255(b)(4), and
                    ``(B) 35 percent is invested in fixed income 
                instruments in the same manner and under the same 
                standards as are provided in section 255(b)(5).
    ``(c) Personal Social Security Savings Annuity.--
            ``(1) In general.--For purposes of this part, the term 
        `personal social security savings annuity' means an annuity 
        that meets the following requirements:
                    ``(A) The annuity starting date (as defined in 
                section 72(c)(4) of the Internal Revenue Code of 1986) 
                commences on the first day of the month beginning after 
                the date of the purchase of the annuity.
                    ``(B) The terms of the annuity provide--
                            ``(i) for a monthly payment to the 
                        participant during the life of the participant 
                        equal to at least the minimum annuity payment 
                        amount (as defined in subsection 
                        (b)(4)(C)(iii)), or
                            ``(ii) in the case of an annuity purchased 
                        under subparagraph (D) of subsection (b)(4), 
                        the maximum monthly payment determined under 
                        regulations prescribed under such subparagraph.
                    ``(C) The terms of the annuity include procedures 
                providing for adjustments in the amount of the monthly 
                payments in the same manner and to the same extent as 
                adjustments are provided for under the procedures used 
                to adjust benefit amounts under section 215(i)(2)(A). 
                Nothing in this subparagraph shall be construed to 
                preclude the terms governing such an annuity from 
                providing for adjustments in the amount of monthly 
                payments resulting in a payment for any month greater 
                than the payment for that month that would result from 
                adjustments required under the preceding sentence.
                    ``(D) The terms of the annuity include such other 
                terms and conditions as the Board requires for the 
                protection of the annuitant.
            ``(2) Exemption from third party claims.--Each personal 
        social security savings annuity shall be exempt from any and 
        all third party claims against the issuer.
    ``(d) Right To Cash Out Personal Social Security Savings Account 
Assets.--To the extent assets credited to a participant's personal 
social security savings account are not used to purchase an annuity 
under subsection (b), the assets not so used shall be payable to the 
participant at such time (in accordance with subsection (a)), in such 
manner, and in such amounts as the participant may specify.
    ``(e) Distributions in Case of Death.--If the participant dies 
before all amounts which are held in the Tier I Investment Fund of the 
Savings Fund or held under a Tier II Investment Option and which are 
credited to the personal social security savings account of the 
individual are otherwise distributed in accordance with this section, 
such amounts shall be distributed, under regulations which shall be 
prescribed by the Board--
            ``(1) in any case in which one or more beneficiaries have 
        been designated in advance, to such beneficiaries in accordance 
        with such designation as provided in such regulations, and
            ``(2) in the case of any amount not distributed as 
        described in paragraph (1), to such individual's estate.

``SEC. 258. GUARANTEE OF PROMISED SOCIAL SECURITY BENEFITS.

    ``(a) In General.--In any case in which, for any month ending after 
the date on which a participant attains retirement age (as defined in 
section 216(l)(1))--
            ``(1) such participant's assumed normal total part A 
        retirement benefit for such month, exceeds
            ``(2) the sum of--
                    ``(A) the monthly payment which is payable (or 
                would be payable) for such month under a personal 
                social security savings annuity with a monthly payment 
                equal to the maximum amount that the participant's 
                personal social security savings account can fund 
                (irrespective of whether such an annuity is purchased 
                and of the amount of the monthly payment actually 
                payable under any personal social security savings 
                annuity which is purchased), and
                    ``(B) such participant's assumed actual total part 
                A retirement benefit for such month,
the Secretary of the Treasury shall pay to such individual for such 
month, from amounts in the general fund of the Treasury (subject to 
section 6 of the Personal Social Security Savings Guarantee and 
Prosperity Act of 2011), an additional amount (if any) equal to the 
excess of the amount described in paragraph (1) over the amount 
described in paragraph (2).
    ``(b) Definitions.--For purposes of this section--
            ``(1) Assumed normal total part a retirement benefit.--The 
        term `assumed normal total retirement part A benefit' means, in 
        connection with a participant, the total amount of the monthly 
        insurance benefits under section 202 based on such 
        participant's wages and self-employment income that would have 
        been payable (as adjusted by taking into account adjustments 
        under section 215(i)) if--
                    ``(A) section 202(z) did not apply, and
                    ``(B) all the beneficiaries had applied for such 
                benefits during the month in which occurs the date on 
                which the participant attains retirement age (as 
                defined in section 216(l)(1)).
            ``(2) Assumed actual total part a retirement benefit.--The 
        term `assumed actual total part A retirement benefit' means, in 
        connection with a participant, the total amount of the monthly 
        insurance benefits under section 202 based on such 
        participant's wages and self-employment income that would have 
        been payable (after applying section 202(z) and as adjusted by 
        taking into account adjustments under section 215(i)) if all 
        the beneficiaries had applied for such benefits during the 
        month in which such participant attains retirement age (as 
        defined in section 216(l)(1)). For purposes of this paragraph, 
        any entitlement of an individual to such benefits for which an 
        application may have been filed prior to such month shall be 
        disregarded.

``SEC. 259. PERSONAL SOCIAL SECURITY SAVINGS BOARD.

    ``(a) Establishment.--There is established in the executive branch 
of the Government a Personal Social Security Savings Board.
    ``(b) Composition.--The Board shall be composed of--
            ``(1) 3 members appointed by the President, of whom 1 shall 
        be designated by the President as Chairman; and
            ``(2) 2 members appointed by the President, of whom--
                    ``(A) 1 shall be appointed by the President after 
                taking into consideration the recommendation made by 
                the Speaker of the House of Representatives in 
                consultation with the minority leader of the House of 
                Representatives; and
                    ``(B) 1 shall be appointed by the President after 
                taking into consideration the recommendation made by 
                the majority leader of the Senate in consultation with 
                the minority leader of the Senate.
    ``(c) Advice and Consent.--Appointments under subsection (b) shall 
be made by and with the advice and consent of the Senate.
    ``(d) Membership Requirements.--Members of the Board shall have 
substantial experience, training, and expertise in the management of 
financial investments and pension benefit plans.
    ``(e) Length of Appointments.--
            ``(1) Terms.--A member of the Board shall be appointed for 
        a term of 4 years, except that of the members first appointed 
        under subsection (b)--
                    ``(A) the Chairman shall be appointed for a term of 
                4 years;
                    ``(B) the members appointed under subsection (b)(2) 
                shall be appointed for terms of 3 years; and
                    ``(C) the remaining members shall be appointed for 
                terms of 2 years.
            ``(2) Vacancies.--
                    ``(A) In general.--A vacancy on the Board shall be 
                filled in the manner in which the original appointment 
                was made and shall be subject to any conditions that 
                applied with respect to the original appointment.
                    ``(B) Completion of term.--An individual chosen to 
                fill a vacancy shall be appointed for the unexpired 
                term of the member replaced.
            ``(3) Expiration.--The term of any member shall not expire 
        before the date on which the member's successor takes office.
    ``(f) Duties.--The Board shall--
            ``(1) administer the program established under this part 
        and issue regulations necessary for the administration of such 
        program;
            ``(2) establish policies for the investment and management 
        of the Savings Fund, including the Tier I Investment Fund, and 
        amounts held under Tier II Investment Options, including 
        policies applicable to the asset managers, recordkeepers, and 
        custodians with responsibility for managing the investment of 
        amounts credited to personal social security investment 
        accounts, and for the management and operation of personal 
        social security savings annuities, which shall provide for--
                    ``(A) prudent investments suitable for accumulating 
                funds for payment of retirement income;
                    ``(B) sound management practices; and
                    ``(C) low administrative costs;
            ``(3) review the performance of investments made for the 
        Tier I Investment Fund;
            ``(4) review the performance of investments made under Tier 
        II Investment Options;
            ``(5) review the management and operation of personal 
        social security savings annuities;
            ``(6) review and approve the budget of the Board; and
            ``(7) comply with the fiduciary requirements of part 4 of 
        subtitle B of title I of the Employee Retirement Income 
        Security Act of 1974 (relating to fiduciary responsibility) in 
        connection with any exercise of discretion in connection with 
        the assets of the Savings Fund.
    ``(g) Administrative Provisions.--
            ``(1) In general.--The Board may--
                    ``(A) adopt, alter, and use a seal;
                    ``(B) except as provided in paragraph (4), direct 
                the Executive Director to take such action as the Board 
                considers appropriate to carry out the provisions of 
                this part and the policies of the Board in accordance 
                with delegations under this part;
                    ``(C) upon the concurring votes of 4 members, 
                remove the Executive Director from office for good 
                cause shown;
                    ``(D) provide to the Executive Director such 
                resources as are necessary to carry out the duties of 
                the Executive Director; and
                    ``(E) take such other actions as may be necessary 
                to carry out the functions of the Board.
            ``(2) Meetings.--The Board shall meet--
                    ``(A) not less than once during each month; and
                    ``(B) at additional times at the call of the 
                Chairman.
            ``(3) Exercise of powers.--
                    ``(A) In general.--Except as provided in paragraph 
                (1)(C), the Board shall perform the functions and 
                exercise the powers of the Board on a majority vote of 
                a quorum of the Board. Three members of the Board shall 
                constitute a quorum for the transaction of business.
                    ``(B) Vacancies.--A vacancy on the Board shall not 
                impair the authority of a quorum of the Board to 
                perform the functions and exercise the powers of the 
                Board.
            ``(4) Limitations on investments.--The Board may not direct 
        any person--
                    ``(A) to invest, or to cause to be invested, in any 
                specific asset any sums which are in the Tier I 
                Investment Fund or which are otherwise credited to any 
                personal social security investment account, or
                    ``(B) to dispose of, or cause to be disposed of, 
                any specific asset of such Fund or any such account.
    ``(h) Compensation.--
            ``(1) In general.--Each member of the Board who is not an 
        officer or employee of the Federal Government shall be 
        compensated at the daily rate of basic pay for level IV of the 
        Executive Schedule for each day during which such member is 
        engaged in performing a function of the Board.
            ``(2) Expenses.--A member of the Board shall be paid 
        travel, per diem, and other necessary expenses under subchapter 
        I of chapter 57 of title 5, United States Code, while traveling 
        away from such member's home or regular place of business in 
        the performance of the duties of the Board.
            ``(3) Source of funds.--Payments authorized under this 
        subsection shall be paid from the Tier I Investment Fund, as 
        determined appropriate by the Board.
    ``(i) Discharge of Responsibilities.--The members of the Board 
shall discharge their responsibilities solely in the interest of the 
participants and their beneficiaries under this part.
    ``(j) Annual Independent Audit.--The Board shall annually engage an 
independent qualified public accountant to audit the activities of the 
Board.
    ``(k) Submission of Budget to Congress.--The Board shall prepare 
and submit to the President, and, at the same time, to the appropriate 
committees of Congress, an annual budget of the expenses and other 
items relating to the Board which shall be included as a separate item 
in the budget required to be transmitted to Congress under section 1105 
of title 31, United States Code.
    ``(l) Submission of Legislative Recommendations.--The Board may 
submit to the President, and, at the same time, shall submit to each 
House of Congress, any legislative recommendations of the Board 
relating to any of its functions under this part or any other provision 
of law.

``SEC. 260. EXECUTIVE DIRECTOR.

    ``(a) Appointment of Executive Director.--The Board shall appoint, 
without regard to the provisions of law governing appointments in the 
competitive service, an Executive Director by action agreed to by a 
majority of the members of the Board.
    ``(b) Duties.--The Executive Director shall, as determined 
appropriate by the Board--
            ``(1) carry out the policies established by the Board;
            ``(2) invest and manage the Tier I Investment Fund in 
        accordance with the investment policies and other policies 
        established by the Board;
            ``(3) administer the provisions of this part relating to 
        the Tier I Investment Fund; and
            ``(4) prescribe such regulations (other than regulations 
        relating to fiduciary responsibilities) as may be necessary for 
        the administration of this part relating to the Tier I 
        Investment Fund.
    ``(c) Administrative Authority.--The Executive Director may, within 
the scope of the duties of the Executive Director as determined by the 
Board--
            ``(1) appoint such personnel as may be necessary to carry 
        out the provisions of this part relating to the Tier I 
        Investment Fund;
            ``(2) subject to approval by the Board, procure the 
        services of experts and consultants under section 3109 of title 
        5, United States Code;
            ``(3) secure directly from an Executive agency, the United 
        States Postal Service, or the Postal Rate Commission any 
        information necessary to carry out the provisions of this part 
        and the policies of the Board relating to the Tier I Investment 
        Fund;
            ``(4) make such payments out of sums in the Tier I 
        Investment Fund as the Executive Director determines, in 
        accordance with regulations of the Board, are necessary to 
        carry out the provisions of this part and the policies of the 
        Board;
            ``(5) pay the compensation, per diem, and travel expenses 
        of individuals appointed under paragraphs (1), (2), and (6) 
        from the Tier I Investment Fund, in accordance with regulations 
        of the Board;
            ``(6) accept and use the services of individuals employed 
        intermittently in the Government service and reimburse such 
        individuals for travel expenses, authorized by section 5703 of 
        title 5, United States Code, including per diem as authorized 
        by section 5702 of such title;
            ``(7) except as otherwise expressly prohibited by law or 
        the policies of the Board, delegate any of the Executive 
        Director's functions to such employees under the Board as the 
        Executive Director may designate and authorize such successive 
        redelegations of such functions to such employees under the 
        Board as the Executive Director may consider to be necessary or 
        appropriate; and
            ``(8) take such other actions as are appropriate to carry 
        out the functions of the Executive Director.''.

SEC. 3. MONTHLY INSURANCE BENEFITS IN CONNECTION WITH PARTICIPANTS IN 
              THE PERSONAL SOCIAL SECURITY SAVINGS PROGRAM.

    Section 202 of the Social Security Act (42 U.S.C. 402) is amended 
by adding at the end the following new subsection:

          ``Benefits in the Case of Participants Under Part B

    ``(z)(1) Notwithstanding any other provision of this title, subject 
to paragraphs (2) and (3), the amount of any old-age insurance benefit 
under subsection (a) of a participant under part B and any other 
monthly insurance benefit under this section based on the participant's 
wages and self-employment income (as determined before applying any 
reduction or deduction otherwise applicable under this title) shall be 
reduced by a percentage equal to the product derived by multiplying 50 
percent by a fraction--
            ``(A) the numerator of which is the present value of the 
        total amount of the contributions made with respect to the 
        participant to the Personal Social Security Savings Fund under 
        section 254, and
            ``(B) the denominator of which is the present value of the 
        total amount of the contributions which would have been made 
        with respect to the participant to the Personal Social Security 
        Savings Fund under section 254 if contributions under section 
        254 had been made with respect to such participant for all of 
        such participant's benefit computation years (as defined in 
        215(b)(2)(B)((i)), determined--
                    ``(i) as if the program established by this part 
                had been in effect as of the beginning of such 
                participant's first benefit computation year, and
                    ``(ii) without regard to section 6 of the Save 
                Social Security Act.
    ``(2) Paragraph (1) shall not apply with respect to child's 
insurance benefits under subsection (d) or mother's or father's 
insurance benefits under subsection (g).
    ``(3) In the case of old-age insurance benefits of an individual 
who was entitled to disability insurance benefits under section 223 for 
the month preceding the month in which such individual attained 
retirement age (as defined in section 216(l)), such benefit shall be 
subject to a reduction under this subsection, in lieu of the reduction 
otherwise applicable under paragraph (1), equal to the product derived 
by multiplying--
            ``(A) the amount of such reduction otherwise applicable, by
            ``(B) a fraction--
                    ``(i) the numerator of which is the number of 
                calendar years, ending after the participant attained 
                age 21 and beginning before the date on which the 
                participant attained age 61, during each of which the 
                participant was not entitled to disability insurance 
                benefits under section 223 or was so entitled for fewer 
                than 6 months, to
                    ``(ii) 40.''.

SEC. 4. TAX TREATMENT OF ACCOUNTS.

    (a) Personal Social Security Savings Program.--Subchapter F of 
chapter 1 of the Internal Revenue Code of 1986 (relating to exempt 
organizations) is amended by adding at the end the following new part:

          ``PART IX--PERSONAL SOCIAL SECURITY SAVINGS PROGRAM

``Sec. 530A. Personal Social Security Savings Program

``SEC. 530A. PERSONAL SOCIAL SECURITY SAVINGS PROGRAM.

    ``(a) General Rule.--The Personal Social Security Savings Fund and 
each Tier II Investment Option are exempt from taxation under this 
subtitle. Notwithstanding the preceding sentence, sums in a personal 
social security savings account which are attributable to a Tier II 
Option shall be subject to the taxes imposed by section 511 (relating 
to imposition of tax on unrelated business income of charitable, etc. 
organizations).
    ``(b) Distributions Taxed as Social Security Benefits.--See section 
86 for tax treatment of distributions from personal social security 
savings accounts and personal social security annuity as social 
security benefits.
    ``(c) Estate Tax Treatment.--No amount shall be includible in the 
gross estate of any individual for purposes of chapter 11 by reason of 
an interest in the Tier I Investment Fund of the Personal Social 
Security Savings Fund or held under a Tier II Investment Option and 
which is credited to the personal social security savings account of 
the individual.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Personal social security savings account.--The term 
        `personal social security savings account' means an account 
        established under section 253(b) of the Social Security Act.
            ``(2) Personal social security savings annuity.--The term 
        `personal social security savings annuity' means an annuity 
        purchased under section 257 of the Social Security Act.
            ``(3) Personal social security savings fund.--The term 
        `Personal Social Security Savings Fund' means the Savings Fund 
        established under section 252 of the Social Security Act.
            ``(4) Tier i investment fund.--The term `Tier I Investment 
        Fund' has the meaning given such term by section 251(8) of the 
        Social Security Act.
            ``(5) Tier ii investment option.--The term `Tier II 
        Investment Option' has the meaning given such term by section 
        251(9) of the Social Security Act.''.
    (b) Annuity and Guarantee Payments.--Paragraph (1) of section 86(d) 
of the Internal Revenue Code of 1986 is amended to read as follows:
            ``(1) In general.--For purposes of this section, the term 
        `social security benefit' means any amount received by the 
        taxpayer--
                    ``(A) by reason of entitlement to--
                            ``(i) a monthly benefit under title II of 
                        the Social Security Act,
                            ``(ii) a tier 1 railroad retirement 
                        benefit, or
                            ``(iii) a payment under section 258 of the 
                        Social Security Act (relating to guarantee of 
                        promised Social Security benefits), or
                    ``(B) as a payment from a personal social security 
                savings account or a personal social security savings 
                annuity under section 257 of the Social Security 
                Act.''.
            (1) Clerical amendment.--The table of parts for subchapter 
        F of chapter 1 of such Code is amended by adding after the item 
        relating to part VIII the following new item:

        ``Part IX. Personal Social Security Savings Program.''.

    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2011.

SEC. 5. REIMBURSEMENT OF SPENDING REDUCTION ACCOUNT FROM SAVINGS 
              RESULTING FROM PERSONAL SOCIAL SECURITY SAVINGS PROGRAM.

    Section 201 of the Social Security Act (42 U.S.C. 401) is amended 
by adding at the end the following new subsection:
    ``(o)(1) At the end of any reimbursement year, the Managing Trustee 
shall transfer from the Federal Old-Age and Survivors Insurance Trust 
Fund and the Federal Disability Insurance Trust Fund (hereinafter in 
this subsection referred to as the `Trust Funds') to the Spending 
Reduction Account of the Treasury, in amounts determined appropriate by 
the Managing Trustee in relation to each of the Trust Funds, such sums 
as are necessary to reimburse the Spending Reduction Account an amount 
equal to the reimbursement amount for such year.
    ``(2) For purposes of this subsection--
            ``(A) The term `reimbursement year' means a year for which, 
        as estimated by the Managing Trustee, there is a Savings 
        Program excess balance in the Trust Funds at the end of such 
        year. In determining the amount of any excess under this 
        subparagraph, the Managing Trustee shall disregard any excess 
        in the Trust Funds which would be attributable to the operation 
        of such Trust Funds if this Act had not been enacted. The 
        estimation made pursuant to this subparagraph for a 
        reimbursement year shall be made not later than November 1 of 
        such reimbursement year.
            ``(B) The term `Savings Program excess balance' for a year 
        means an amount by which the total balance in the Trust Funds 
        at the end of such year exceeds (before the application of this 
        subsection) 100 percent of the total amount of benefits to be 
        payable from the Trust Funds for the succeeding year. In 
        determining the amount of any excess under this subparagraph, 
        the Managing Trustee shall treat as excess in the Trust Funds 
        only the amount by which the excess is greater than the amount 
        which would be the excess in the Trust Funds if the Save Social 
        Security Act had not been enacted.
            ``(C) The term `reimbursement amount' for a reimbursement 
        year means the lesser of--
                    ``(i) the total amount of payments made during such 
                year and prior years from the Spending Reduction 
                Account of the Treasury under sections 254 and 258 for 
                which reimbursement has not been made under paragraph 
                (1), including interest at a rate equal to the rate 
                applicable from time to time for obligations issued to 
                the Trust Funds under subsection (d), or
                    ``(ii) the Savings Program excess balance for the 
                reimbursement year.
    ``(3) The total amount transferred under paragraph (1) as the 
reimbursement amount for any reimbursement year shall be available, 
until expended--
            ``(A) first, for reimbursement of the amount of payments 
        made under section 254 during the reimbursement year,
            ``(B) second, for reimbursement of the amount of payments 
        made under section 258 during the reimbursement year,
            ``(C) third, for reimbursement of any unreimbursed amount 
        of payments made under section 254 during prior years, together 
        with interest accrued on such amount, and
            ``(D) finally, for reimbursement of any unreimbursed amount 
        of payments made under section 258 during prior years, together 
        with interest accrued on such amount.''.

SEC. 6. FUNDING OF PERSONAL SOCIAL SECURITY SAVINGS PROGRAM FROM 
              CREDITS FOR REDUCTIONS IN FEDERAL SPENDING.

    (a) Spending Reduction Account.--There is established in the 
Treasury of the United States a Personal Social Security Savings 
Program Spending Reduction Account (hereafter in this section referred 
to as the ``Spending Reduction Account''.
    (b) Expenditures From General Fund of Treasury Limited to Amounts 
Credited to Spending Reduction Account.--
            (1) In general.--Amounts which, but for this section, would 
        otherwise be payable from the general fund of the Treasury to 
        carry out section 254(a)(2) and 258(a) of the Social Security 
        Act (as added by this Act) shall be payable only from the 
        Spending Reduction Account and only to the extent of the 
        available balance in such Account, as provided in this section.
            (2) Crediting to spending reduction account of amounts 
        saved from program reductions.--
                    (A) In general.--From time to time during each 
                fiscal year, the Secretary of the Treasury shall credit 
                to the Spending Reduction Account the amount of savings 
                to the Treasury for such fiscal year derived (as 
                determined by such Secretary in consultation with the 
                Director of Office of Management and Budget) from 
                legislation providing for the reduction or termination 
                of Federal programs which were in effect on the date of 
                the enactment of this Act. To the extent that any such 
                legislation provides for savings with respect to 
                multiple fiscal years, the Secretary of the Treasury 
                shall provide for crediting to the Spending Reduction 
                Account for each such fiscal year of the amount of 
                savings properly attributable to such fiscal year 
                pursuant to such legislation.
                    (B) Annual report of amounts in fund necessary for 
                full funding of payments.--Not later than April 15 
                preceding each fiscal year beginning on or after 
                October 1, 2012, the Director of the Office of 
                Management and Budget--
                            (i) shall, in consultation with the 
                        Personal Social Security Savings Board, report 
                        to each House of the Congress the amount 
                        determined by the Board, based on reasonable 
                        projections, as necessary to provide for timely 
                        payment in full of amounts otherwise payable, 
                        but for this section, from the Spending 
                        Reduction Account for such fiscal year, and
                            (ii) shall include in such report 
                        recommendations for reductions or terminations 
                        of Federal programs in effect on the date of 
                        the enactment of this Act necessary to provide 
                        for savings sufficient to provide for crediting 
                        of funds to the Spending Reduction Account 
                        sufficient to provide for payments under 
                        sections 254(a)(2) and 258(a) of the Social 
                        Security Act.
            (3) Reduction in payments as necessary commensurate with 
        extent of reductions in other programs.--
                    (A) In general.--The total amount payable under 
                sections 254(a)(2) and 258(a) of the Social Security 
                Act for any fiscal year shall be payable only to the 
                extent of the total amount that the Director of the 
                Office of Management and Budget determines, based on 
                reasonable projections made in advance of such fiscal 
                year and reported pursuant to subparagraph (B), will be 
                credited to the Spending Reduction Account for such 
                fiscal year pursuant to paragraph (2) (plus any amounts 
                remaining for expenditure pursuant to subparagraph 
                (D)).
                    (B) Annual report of omb regarding sufficiency of 
                fund.--The Director shall set forth the determination 
                made under subparagraph (A) with respect to each fiscal 
                year in a report to each House of the Congress not 
                later than September 1 preceding such fiscal year, 
                based on legislation enacted prior to such date.
                    (C) Pro rata reductions in case of insufficiency.--
                In any case in which the determination made under 
                subparagraph (A) for any fiscal year indicates, as 
                determined by the Director, a projected insufficiency 
                for such fiscal year in the balance of the Spending 
                Reduction Account to make all payments from the 
                Spending Reduction Account during such fiscal year in 
                full when otherwise due, such payments shall be reduced 
                on a pro rata basis in relation to the projected 
                amounts available from time to time in the Spending 
                Reduction Account for such payments during the fiscal 
                year.
                    (D) Restoration of reduced payments.--In any case 
                in which, as of the end of any fiscal year, a balance 
                remains in the Spending Reduction Account after payment 
                in full when due of all payments payable during such 
                fiscal year, additional payments shall be made from 
                such balance so as to restore, to the maximum extent 
                practicable, payments which were made in prior fiscal 
                years in reduced amounts pursuant to this subparagraph 
                to amounts constituting payment in full of such 
                payments.
                    (E) Carryover of account balances.--Amounts 
                credited to the Spending Reduction Account for a fiscal 
                year which are not expended as of the end of such 
                fiscal year shall remain available for expenditure in 
                subsequent fiscal years until expended.
            (4) Limitations.--
                    (A) Savings for any fiscal year may only be taken 
                into account under paragraph (2) once.
                    (B) Savings taken into account under paragraph (2) 
                may not be taken into account for the purposes of any 
                other spending reduction account.
                    (C) Notwithstanding any other provision of law, no 
                provision of any amendment made by this title may be 
                carried out except to the extent that funds for such 
                provision are provided for such purpose from the 
                Spending Reduction Account. The Secretary of the 
                Treasury shall make such additional pro rata reductions 
                in payments for any fiscal year to the extent necessary 
                for compliance with the preceding sentence.
            (5) Lockbox.--
                    (A) General rule.--Savings credited under paragraph 
                (2) to the Spending Reduction Account may not be 
                transferred or spent for any purpose other than to 
                carry out the provisions of this Act and the amendments 
                made thereby.
                    (B) Enforcement.--If any amount is transferred or 
                spent in violation of subparagraph (A), no amount may 
                be transferred to the Savings Reduction Account on and 
                after the date of such violation. The determination of 
                whether an amount is transferred or spent in violation 
                of subparagraph (A) shall be made irrespective of 
                whether such provision of law is a subsequently enacted 
                provision or directly or indirectly seeks to waive the 
                application of this paragraph.

SEC. 7. INTERIM FINANCING OF THE SOCIAL SECURITY TRUST FUNDS.

    Subsection (l) of section 201 of the Social Security Act (42 U.S.C. 
401(l)) is amended to read as follows:
    ``(l)(1) If at any time on or after January 1, 2012, the Managing 
Trustee determines that borrowing authorized under this subsection is 
necessary in order to ensure that sufficient assets are available in 
the Federal Old-Age and Survivors Insurance Trust Fund or the Federal 
Disability Insurance Trust Fund to provide for timely payment in full 
of benefits from such Trust Fund, the Managing Trustee may borrow such 
amounts as the Managing Trustee determines to be appropriate from the 
general fund of the Treasury for transfer to and deposit in such Trust 
Fund.
    ``(2) If in any month after a loan has been made to either Trust 
Fund under paragraph (1), the Managing Trustee determines that the 
assets of such Trust Fund are sufficient to permit repayment of all or 
part of any loans made to such Trust Fund under paragraph (1), the 
Managing Trustee shall make such repayments as the Managing Trustee 
determines to be appropriate to provide for prompt repayment of the 
loans, together with accumulated interest. Interest shall accumulate on 
the unpaid balance of the loan at a rate equal to the rate applicable 
on the date of the loan for obligations issued to the Trust Fund under 
subsection (d).
    ``(3) The Board of Trustees shall make a timely report to the 
Congress of any amounts transferred under this subsection.''.
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