I 

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. 

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

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

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

5 ‘‘Save Social Security Act’’. 

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

7 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. 


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‘‘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. 

1 SEC. 2. ESTABLISHMENT OF PERSONAL SOCIAL SECURITY 

2 SAVINGS PROGRAM. 

3 Title II of the Social Security Act is amended— 

4 (1) by inserting before section 201 the fol5 lowing: 

6 ‘‘PART A—INSURANCE BENEFITS’’; 

7 and 

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

9 ‘‘PART B—PERSONAL SOCIAL SECURITY SAVINGS 

10 PROGRAM 

11 ‘‘SEC. 251. DEFINITIONS. 

12 ‘‘For purposes of this part— 

13 ‘‘(1) QUALIFYING INDIVIDUAL.—The term 

14 ‘qualifying individual’ means any individual— 

15 ‘‘(A) who is born on or after January 1, 

16 1961, and 


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1 ‘‘(B)(i) who receives wages in any calendar 

2 year after December 31, 2010, on which there 

3 is imposed a tax under section 3101(a) of the 

4 Internal Revenue Code of 1986, or 

5 ‘‘(ii) who derives self-employment income 

6 for a taxable year beginning after December 31, 

7 2010, on which there is imposed a tax under 

8 section 1401(a) of such Code. 

9 ‘‘(2) PARTICIPANT.—The term ‘participant’ 

10 means a qualifying individual who has elected under 

11 section 253(a) to participate in the program estab12 lished under this part. 

13 ‘‘(3) BOARD.—The term ‘Board’ means the 

14 Personal Social Security Savings Board established 

15 under section 259. 

16 ‘‘(4) EXECUTIVE DIRECTOR.—The term ‘Execu17 tive Director’ means the Executive Director ap18 pointed under section 260. 

19 ‘‘(5) PERSONAL SOCIAL SECURITY SAVINGS AC20 COUNT.—The term ‘personal social security savings 

21 account’ means an account established under section 

22 253(b). 

23 ‘‘(6) PERSONAL SOCIAL SECURITY SAVINGS AN24 NUITY.—The term ‘personal social security savings 


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1 annuity’ means an annuity offered by the Annuity 

2 Issuance Authority under section 257. 

3 ‘‘(7) SAVINGS FUND.—The term ‘Savings Fund’ 

4 means the Personal Social Security Savings Fund 

5 established under section 252. 

6 ‘‘(8) TIER I INVESTMENT FUND.—The term 

7 ‘Tier I Investment Fund’ means the fund created 

8 under section 255. 

9 ‘‘(9) TIER II INVESTMENT OPTION.—The term 

10 ‘Tier II Investment Option’ means an investment 

11 option which is— 

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

13 by the Board under section 256(b); and 

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

15 256(d). 

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

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

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

19 the Treasury of the United States a trust fund to 

20 be known as the ‘Personal Social Security Savings 

21 Fund’. 

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

23 shall consist of— 

24 ‘‘(A) all amounts contributed to the Sav25 ings Fund under section 254, increased by the 


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1 total net earnings from investments of sums in 

2 the Savings Fund attributable to such contrib3 uted amounts, and reduced by the total net 

4 losses from investments of such sums, and 

5 ‘‘(B) the reserves held in the Annuity Re6 serves Account established under section 

7 257(b)(3), increased by the total net earnings 

8 from investments of such reserves, and reduced 

9 by the total net losses from investments of such 

10 reserves. 

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

12 trustees of the Savings Fund. 

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

14 This part constitutes budget authority in advance of 

15 appropriations Acts and represents the obligation of 

16 the Board to provide for the payment of amounts 

17 provided under this part. The amounts held in the 

18 Savings Fund are appropriated and shall remain 

19 available without fiscal year limitation. 

20 ‘‘(b) AVAILABILITY.—The sums in the Savings Fund 

21 are appropriated and shall remain available without fiscal 

22 year limitation— 

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

24 Fund of the Savings Fund under section 255; 


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1 ‘‘(2) to transfer funds in the Tier I Investment 

2 Fund into Tier II Investment Options under section 

3 256; 

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

5 section 257; and 

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

7 Board in accordance with subsection (d). 

8 ‘‘(c) LIMITATIONS ON USE OF FUNDS.— 

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

10 credited to a participant’s personal social security 

11 savings account under section 255(a)(1)(3) may not 

12 be used for, or diverted to, purposes other than for 

13 the exclusive benefit of the participant or the partici14 pant’s beneficiaries under this part. 

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

16 Fund may not be assigned or alienated and are not 

17 subject to execution, levy, attachment, garnishment, 

18 or other legal process. 

19 ‘‘(d) PAYMENT OF ADMINISTRATIVE EXPENSES.— 

20 Administrative expenses incurred to carry out this part 

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

22 conjunction with the allocation of investment earnings and 

23 losses under section 253(d). 

24 ‘‘(e) LIMITATION.—The sums in the Savings Fund 

25 shall not be appropriated for any purpose other than the 


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

2 any other purpose. 

3 ‘‘SEC. 253. PARTICIPATION IN PROGRAM AND ESTABLISH4 MENT OF PERSONAL SOCIAL SECURITY SAV5 INGS ACCOUNTS. 

6 ‘‘(a) PARTICIPATION.—A qualifying individual may, 

7 at any time on or after January 1, 2012, elect, in such 

8 form and manner as shall be prescribed by the Board, to 

9 be a participant in the program established under this 

10 part. The Board shall certify to the Executive Director 

11 that the qualifying individual is a participant in the pro12 gram. An election under this subsection shall be irrev13 ocable. 

14 ‘‘(b) ESTABLISHMENT OF PUBLICLY ADMINISTERED

15 SYSTEM OF PERSONAL SECURITY SAVINGS ACCOUNTS.— 

16 Upon receipt of the certification that a qualifying indi17 vidual is a participant in the program established under 

18 this part, the Executive Director shall establish a personal 

19 social security savings account for such participant. Such 

20 account shall be the means by which amounts contributed 

21 to the Savings Fund under section 254 and held in the 

22 Tier I Investment Fund of the Savings Fund under sec23 tion 255 or under Tier II Investment Options under sec24 tion 256 are credited to the participant, under procedures 

25 which shall be established by the Board by regulation. 


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1 Each account of a participant shall be identified to the 

2 participant by means of the participant’s social security 

3 account number. 

4 ‘‘(c) ACCOUNT BALANCE.—The balance in a partici5 pant’s account at any time is the sum of— 

6 ‘‘(1) the excess of— 

7 ‘‘(A) all deposits in the Tier I Investment 

8 Fund of the Savings Fund credited to such par9 ticipant’s personal social security savings ac10 count, subject to such increases and reductions 

11 as may result from allocations made to and re12 ductions made in the account pursuant to sub13 section (d); over 

14 ‘‘(B) amounts paid out of the Tier I In15 vestment Fund in connection with amounts 

16 credited to such participant’s personal social se17 curity savings account; plus 

18 ‘‘(2) the excess of— 

19 ‘‘(A) the deposits in the Tier II Investment 

20 Options credited to such participant’s personal 

21 social security savings account, subject to such 

22 increases and reductions as may result from 

23 amounts credited to, and reductions made in, 

24 the account pursuant to subsection (d)(2); over 


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1 ‘‘(B) amounts paid out of the Tier II In2 vestment Options of such participant. 

3 The calculation made under paragraph (2) shall be made 

4 separately for each Tier II Investment Option of the par5 ticipant. 

6 ‘‘(d) ALLOCATION OF EARNINGS AND LOSSES.—Pur7 suant to regulations which shall be prescribed by the 

8 Board, the Executive Director shall allocate to each per9 sonal social security savings account an amount equal to 

10 the net earnings and net losses from each investment of 

11 sums— 

12 ‘‘(1) in the Tier I Investment Fund which are 

13 attributable to sums credited to such account re14 duced by an appropriate share of the administrative 

15 expenses paid out of the net earnings, as determined 

16 by the Executive Director; and 

17 ‘‘(2) in the Tier II Investment Options which 

18 are attributable to sums credited to such account re19 duced by the administrative expenses paid out of the 

20 net earnings. 

21 ‘‘SEC. 254. CONTRIBUTIONS TO THE SAVINGS FUND. 

22 ‘‘(a) FORM AND MANNER OF CONTRIBUTIONS.— 

23 ‘‘(1) DETERMINATION AND CERTIFICATION OF

24 CONTRIBUTION AMOUNTS.—In the case of each 

25 qualifying individual who becomes a participant purVerDate Mar 15 2010 04:56 Sep 13, 2011 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2889.IH H2889

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1 suant to an election made under section 253, the 

2 Executive Director shall— 

3 ‘‘(A) prior to the first calendar quarter be4 ginning after the effective date of the election, 

5 determine the contribution amount with respect 

6 to the participant under subsection (b) for the 

7 calendar year in which such quarter occurs and 

8 certify such amount to the Secretary of the 

9 Treasury, and 

10 ‘‘(B) prior to each calendar year com11 mencing after the effective date of the election, 

12 determine the contribution amount with respect 

13 to the participant under subsection (b) for such 

14 calendar year and certify such amount to the 

15 Secretary of the Treasury. 

16 ‘‘(2) TRANSFER OF CONTRIBUTION AMOUNTS

17 TO SAVINGS FUND.—Upon receipt of a certification 

18 of a contribution amount for any calendar year 

19 under paragraph (1), the Secretary of the Treasury 

20 shall, before the end of each calendar quarter begin21 ning during such calendar year and after the date 

22 of such certification, transfer 25 percent of such 

23 amount from amounts in the general fund of the 

24 Treasury (subject to section 6 of the Personal Social 


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1 Security Savings Guarantee and Prosperity Act of 

2 2011). 

3 ‘‘(b) AMOUNT OF CONTRIBUTION.— 

4 ‘‘(1) IN GENERAL.—The contribution amount 

5 for any calendar year under subsection (a) with re6 spect to a participant shall be equal to the sum of— 

7 ‘‘(A) the product derived by multiplying— 

8 ‘‘(i) the sum of the total wages paid 

9 to, and self-employment income derived by, 

10 the participant which are creditable by the 

11 Commissioner of Social Security to the 

12 preceding calendar year, to the extent such 

13 total wages and self-employment income do 

14 not exceed the base amount for such pre15 ceding calendar year, by 

16 ‘‘(ii) 5 percent, and 

17 ‘‘(B) the product derived by multiplying— 

18 ‘‘(i) the sum of the total wages paid 

19 to, and self-employment income derived by, 

20 the participant which are creditable by the 

21 Commissioner to such preceding calendar 

22 year, to the extent such total wages and 

23 self-employment income exceed the base 

24 amount for such preceding calendar year 

25 but do not exceed the contribution and 


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1 benefit base (determined under section 

2 230) for such preceding calendar year, by 

3 ‘‘(ii) 2.5 percent. 

4 ‘‘(2) BASE AMOUNT.—For purposes of para5 graph (1)— 

6 ‘‘(A) INITIAL BASE AMOUNT.—The base 

7 amount for calendar years 2011 and 2012 is 

8 $10,000. 

9 ‘‘(B) ADJUSTMENTS TO BASE AMOUNT.— 

10 The base amount for any calendar year after 

11 2012 is the product derived by multiplying 

12 $10,000 by a fraction— 

13 ‘‘(i) the numerator of which is the na14 tional average wage index (as defined in 

15 section 209(k)) for the first of the 2 pre16 ceding calendar years, and 

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

18 national average wage index (as so de19 fined) for 2010, 

20 except that any such product that is not a mul21 tiple of $10.00 shall be rounded to the next 

22 lower multiple of $10.00. 

23 ‘‘(3) DETERMINATION AND TREATMENT OF EX24 CESS CONTRIBUTIONS.—The amount of contribu25 tions for a participant for a calendar year shall be 


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1 determined on the basis of estimates, made by the 

2 Commissioner of Social Security and certified to the 

3 Executive Director, of the wages paid to, and self4 employment income derived by, the participant for 

5 the preceding calendar year. Proper adjustments 

6 shall be made in the maximum amount for subse7 quent calendar years to the extent prior estimates 

8 were in excess of or were less than actual amounts, 

9 except that the Executive Director may, as deter10 mined appropriate by the Executive Director, pro11 vide for refunds to the Treasury of amounts contrib12 uted in excess of the maximum amount in lieu of 

13 such adjustments. Estimates and adjustments made 

14 pursuant to this paragraph shall be communicated 

15 by the Executive Director to the Secretary of the 

16 Treasury in such timely manner as to allow, to the 

17 greatest extent practicable, for contributions to the 

18 Savings Fund which do not exceed the proper 

19 amount. 

20 ‘‘SEC. 255. TIER I INVESTMENT FUND. 

21 ‘‘(a) ESTABLISHMENT OF TIER I INVESTMENT

22 FUND.— 

23 ‘‘(1) IN GENERAL.—The Savings Fund shall in24 clude a separate fund to be known as the ‘Tier I In25 vestment Fund’. 


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1 ‘‘(2) AMOUNTS IN FUND.—The Tier I Invest2 ment Fund consists of all amounts derived from con3 tributions made to the Fund under section 254 and 

4 remaining after investment of such amounts under 

5 subsection (b), including additional amounts derived 

6 as income from such investments. 

7 ‘‘(3) SEPARATE CREDITING TO PERSONAL SO8 CIAL SECURITY SAVINGS ACCOUNTS.— 

9 ‘‘(A) IN GENERAL.—Subject to this sub10 section, the Board shall provide for prompt, 

11 separate crediting of the amounts deposited in 

12 the Tier I Investment Fund to the personal so13 cial security savings account of each participant 

14 to the extent such amount consists of contribu15 tions made to the Savings Fund under section 

16 254 with respect to such participant, together 

17 with any increases or decreases therein so as to 

18 reflect the net returns and losses from invest19 ment thereof while held in the Fund. 

20 ‘‘(B) TREATMENT OF MARRIED PARTICI21 PANTS.—If the participant is married as of the 

22 end of the calendar year in which the amounts 

23 to be credited were deposited in the Tier I In24 vestment Fund and the spouse is also a partici25 pant, the personal social security savings acVerDate Mar 15 2010 04:56 Sep 13, 2011 Jkt 099200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\H2889.IH H2889

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1 count of the participant and the personal social 

2 security savings account of his or her spouse 

3 shall each be credited with 50 percent of such 

4 amounts. 

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

6 Fund are appropriated and shall remain available 

7 without fiscal year limitation— 

8 ‘‘(A) to be held for investment under sub9 section (b), 

10 ‘‘(B) to pay the administrative expenses re11 lated to the Fund, and 

12 ‘‘(C) to make transfers to Tier II Invest13 ment Options under section 256 or to make 

14 payments under section 257. 

15 ‘‘(b) INVESTMENT GUIDELINES.— 

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

17 of amounts credited to each personal social security 

18 savings account, the Board shall provide by regula19 tion for 3 investment options. Such options shall 

20 consist of the 90/10 investment option, the 70/30 in21 vestment option, the 50/50 investment option, and 

22 the lifecycle investment option. 

23 ‘‘(2) ALTERNATIVE INVESTMENT OPTIONS.— 

24 ‘‘(A) THE 90/10 INVESTMENT OPTION.— 

25 Under the 90/10 investment option, amounts 


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1 credited to the participant’s personal social se2 curity savings account are held in the Tier I In3 vestment Fund so as to ensure, to the max4 imum extent practicable, that, of the total bal5 ance credited to the account and available for 

6 investment (after allowing for administrative 

7 expenses)— 

8 ‘‘(i) 90 percent is invested in common 

9 stock as provided in paragraph (4), and 

10 ‘‘(ii) 10 percent is invested in fixed in11 come securities as provided in paragraph 

12 (5). 

13 For such purpose, certified account managers 

14 shall offer the participant a choice of one or 

15 more portfolios of each such type of investment. 

16 ‘‘(B) THE 70/30 INVESTMENT OPTION.— 

17 Under the 70/30 investment option, amounts 

18 credited to the participant’s personal social se19 curity savings account are held in the Tier I In20 vestment Fund so as to ensure, to the max21 imum extent practicable, that, of the total bal22 ance credited to the account and available for 

23 investment (after allowing for administrative 

24 expenses)— 


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1 ‘‘(i) 70 percent is invested in common 

2 stock as provided in paragraph (4), and 

3 ‘‘(ii) 30 percent is invested in fixed in4 come securities as provided in paragraph 

5 (5). 

6 For such purpose, certified account managers 

7 shall offer the participant a choice of one or 

8 more portfolios of each such type of investment. 

9 ‘‘(C) THE 50/50 INVESTMENT OPTION.— 

10 Under the 50/50 investment option, amounts 

11 credited to the participant’s personal social se12 curity savings account are held in the Tier I In13 vestment Fund so as to ensure, to the max14 imum extent practicable, that, of the total bal15 ance credited to the account and available for 

16 investment (after allowing for administrative 

17 expenses)— 

18 ‘‘(i) 50 percent is invested in common 

19 stock as provided in paragraph (4), and 

20 ‘‘(ii) 50 percent is invested in fixed in21 come securities as provided in paragraph 

22 (5). 

23 For such purpose, certified account managers 

24 shall offer the participant a choice of one or 

25 more portfolios of each such type of investment. 


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1 ‘‘(D) LIFECYCLE INVESTMENT OPTION.— 

2 ‘‘(i) IN GENERAL.—Under the 

3 lifecycle investment option, amounts cred4 ited to the participant’s personal social se5 curity savings account are held in the Tier 

6 I Investment Fund so as to ensure, to the 

7 maximum extent practicable, that the total 

8 balance credited to the account and avail9 able for investment (after allowing for ad10 ministrative expenses) shall be invested 

11 over time, under regulations which shall be 

12 prescribed by the Board, in a mix of com13 mon stock and fixed income securities ac14 cording to the each of the investment op15 tions described in subparagraphs (A), (B), 

16 and (C) so as to ensure, to the maximum 

17 extent practicable, that the percentage in18 vested in fixed income securities by individ19 uals in designated cohorts, ranging in age 

20 up to those of at least retirement age, will 

21 increase from 10 percent to 50 percent as 

22 the cohort approaches retirement age. 

23 ‘‘(ii) DEFAULT OPTION.—Except as 

24 provided in an election under paragraph 

25 (3), amounts credited to the participant’s 


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1 personal social security savings account 

2 and held in the Tier I Investment Fund 

3 shall be invested as provided in clause (i). 

4 ‘‘(3) ELECTIONS AMONG INVESTMENT OP5 TIONS.—Pursuant to any individual’s election filed 

6 in accordance with regulations of the Board during 

7 annual open seasons specified in such regulations, 

8 the Executive Director shall, in accordance with 

9 such regulations, provide for disinvestment and rein10 vestment of amounts credited to the participant’s 

11 personal social security savings account and held in 

12 the Tier I Investment Fund under any of the invest13 ment options described in paragraph (2) so as to 

14 provide for investment of amounts credited to the 

15 account in any of the other such investment options 

16 specified in such election. 

17 ‘‘(4) COMMON STOCK INDEX REQUIREMENTS.— 

18 The Board shall establish by regulation standards 

19 which must be met by any portfolio of common stock 

20 selected for investment as provided in subparagraph 

21 (A)(i), (B)(i), (C)(i), or (D) of paragraph (2). 

22 Amounts invested in common stock under an invest23 ment option shall be held in a portfolio designed to 

24 replicate the performance of one or more of indices 

25 comprised of common stock the aggregate market 


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1 value of which is, in each case, a reasonably broad 

2 representation of publicly held companies whose 

3 shares are traded on the equity markets. 

4 ‘‘(5) FIXED INCOME SECURITIES REQUIRE5 MENTS.—The Board shall establish by regulation 

6 standards which must be met by fixed income securi7 ties selected for investment as provided in subpara8 graph (A)(ii), (B)(ii), (C)(ii), or (D) of paragraph 

9 (2). The amounts invested in fixed income securities 

10 shall be held in a portfolio which shall consist of a 

11 diverse range of high-grade corporate bonds, taking 

12 into full account the opposing considerations of risk 

13 and maximization of return. 

14 ‘‘(c) ANNUAL DESCRIPTION OF TIER I INVESTMENT

15 OPTIONS AND DISCLOSURE OF ADMINISTRATIVE

16 COSTS.—The Board shall provide annually to each partici17 pant— 

18 ‘‘(1) a description of the investment options 

19 available with respect to amounts held in the Tier I 

20 Investment Fund and the procedures for selecting 

21 such options; and 

22 ‘‘(2) a disclosure of the rate of administrative 

23 costs chargeable with respect to each investment op24 tion. 


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1 Descriptions and disclosures required under this sub2 section shall be written in a manner calculated to be un3 derstood by the average participant. 

4 ‘‘(d) TREATMENT OF AMOUNTS HELD IN TIER I IN5 VESTMENT FUND.—Subject to this part, amounts depos6 ited into, and held and accounted for in, the Tier I Invest7 ment Fund with respect to any participant shall be treated 

8 as property of such participant, held in trust for such par9 ticipant in the Fund. 

10 ‘‘SEC. 256. TIER II INVESTMENT OPTIONS. 

11 ‘‘(a) ELECTION OF TIER II INVESTMENT OPTIONS.— 

12 ‘‘(1) IN GENERAL.—A participant may elect to 

13 direct transfers from amounts in the Savings Fund 

14 credited to the personal social security savings ac15 count of such individual into 1 or more Tier II In16 vestment Options in accordance with paragraph (2). 

17 ‘‘(2) COMMENCEMENT OF TIER II INVESTMENT

18 OPTIONS UPON ATTAINMENT OF ELECTION THRESH19 OLD.—In any case in which, as of the end of any 

20 calendar year, the total balance in the Savings Fund 

21 credited to a participant’s personal social security 

22 savings account exceeds for the first time the elec23 tion threshold, the Board shall, by regulation, pro24 vide for an opportunity for such participant to make, 

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1 tion of one or more of the Tier II Investment Op2 tions for investment of an amount in the Savings 

3 Fund credited to such account. Such election may be 

4 in lieu of or in addition to investment in the options 

5 available with respect to the Tier I Investment Fund 

6 of the Savings Fund. 

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

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

9 the personal social security savings account of the 

10 participant and elected for transfer to one or more 

11 Tier II Investment Options shall be transferred to 

12 the Tier II Investment Options so elected for such 

13 calendar year, in percentages specified in the elec14 tion by the participant for each Tier II Investment 

15 Option. 

16 ‘‘(4) ELECTION THRESHOLD.— 

17 ‘‘(A) IN GENERAL.—Subject to subpara18 graph (B), for purposes of this subsection the 

19 term ‘election threshold’ means an amount 

20 equal to $25,000. 

21 ‘‘(B) ADJUSTMENTS.—The Board shall ad22 just annually (effective for annual reporting 

23 months occurring after December 2012) the 

24 dollar amount set forth in subparagraph (A) 

25 under procedures providing for adjustments in 


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1 the same manner and to the same extent as ad2 justments are provided for under the proce3 dures used to adjust benefit amounts under sec4 tion 215(i)(2)(A), except that any amount so 

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

6 rounded to the nearest multiple of $1.00. 

7 ‘‘(5) SUBSEQUENT INVESTMENT OF AMOUNTS

8 HELD IN TIER II INVESTMENT OPTIONS.—Any 

9 amounts held in one or more Tier II Investment Op10 tions may be— 

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

12 more other Tier II Investment Options offered 

13 by the same or different eligible entities, subject 

14 to applicable regulations of the Board and the 

15 terms governing the affected Tier II Investment 

16 Options, and 

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

18 annually, to the Tier I Investment Fund, for 

19 deposit in the applicable investment account 

20 then selected by the participant under section 

21 255. 

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

23 ‘‘(1) IN GENERAL.—The Board shall certify eli24 gible entities to offer Tier II Investment Options 

25 under this part. 


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1 ‘‘(2) APPLICATION.—Any eligible entity that de2 sires to be certified by the Board to offer a Tier II 

3 Investment Option shall submit an application to the 

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

5 such information as the Board may require. 

6 ‘‘(3) REQUIREMENTS FOR APPROVAL.—The 

7 Board shall not certify an eligible entity unless such 

8 eligible entity agrees to the following requirements: 

9 ‘‘(A) RECORDKEEPING.—Each eligible en10 tity shall, with respect to each Tier II Invest11 ment Option offered by such eligible entity to 

12 participants, comply with standards which shall 

13 be prescribed by the Board to maintain accu14 rate crediting of the interest of each participant 

15 in the Option to that participant’s personal so16 cial security savings account. 

17 ‘‘(B) TREATMENT OF AMOUNTS HELD IN

18 FUND.—Amounts deposited into, and held and 

19 accounted for in, a Tier II Investment Option 

20 with respect to any participant shall be treated 

21 as property of such participant, held in trust 

22 for such participant. 

23 ‘‘(C) TRUST REQUIREMENTS.—Amounts 

24 held and accounted for with respect to a partici25 pant shall be held in a trust created or orgaVerDate Mar 15 2010 04:56 Sep 13, 2011 Jkt 099200 PO 00000 Frm 00024 Fmt 6652 Sfmt 6201 E:\BILLS\H2889.IH H2889

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1 nized in the United States for the exclusive ben2 efit of such participant or his or her bene3 ficiaries. 

4 ‘‘(D) EXEMPTION FROM THIRD PARTY

5 CLAIMS.—Each Tier II Investment Option shall 

6 be exempt from any and all third party claims 

7 against the eligible entity. 

8 ‘‘(E) DISCLOSURE OF ADMINISTRATIVE

9 COSTS.—Each eligible entity offering a Tier II 

10 Investment Option under this section shall pro11 vide to each participant an annual disclosure of 

12 the rate of administrative costs chargeable with 

13 respect to investment in such Option. Such dis14 closure shall be written in a manner calculated 

15 to be understood by the average participant. 

16 The Board shall provide for coordination of dis17 closures with respect to Tier II Investment Op18 tions under this subparagraph so as to assist 

19 participants in comparing alternative Options 

20 based on administrative costs. 

21 ‘‘(F) ANNUAL DESCRIPTION OF TIER II IN22 VESTMENT OPTIONS AND DISCLOSURE OF AD23 MINISTRATIVE COSTS.— 

24 ‘‘(i) DISCLOSURES TO THE BOARD.— 

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1 vestment Option under this section shall, 

2 in accordance with regulations of the 

3 Board, provide to the Board an annual dis4 closure of the Tier II Investment Options 

5 then currently available with respect to 

6 amounts credited to personal social secu7 rity savings accounts under this part, the 

8 procedures in effect in the case of such eli9 gible entity for selecting such Options, and 

10 the rate of administrative costs chargeable 

11 with respect to investment in each such 

12 Option. 

13 ‘‘(ii) ANNUAL NOTICES TO PARTICI14 PANTS.—The Board shall provide annually 

15 to each participant a notice setting forth— 

16 ‘‘(I) a description of the Tier II 

17 Investment Options available with re18 spect to amounts credited to the par19 ticipant’s personal social security sav20 ings account and the procedures for 

21 selecting such Options; and 

22 ‘‘(II) a disclosure of the rate of 

23 administrative costs chargeable with 

24 respect to each such Option. 


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1 Descriptions and disclosures required 

2 under this clause shall be written in a 

3 manner calculated to be understood by the 

4 average participant. 

5 ‘‘(G) REPORTING TO THE EXECUTIVE DI6 RECTOR AND THE BOARD.—Each eligible entity 

7 shall provide reports to the Executive Director 

8 and the Board at such time, in such manner, 

9 and containing such information as the Board 

10 may require. 

11 ‘‘(4) ELIGIBLE ENTITY DEFINED.—For pur12 poses of this section, the term ‘eligible entity’ means 

13 any investment company (as defined in section 3 of 

14 the Investment Company Act of 1940) or other per15 son that the Board determines appropriate to offer 

16 Tier II Investment Options under this part. 

17 ‘‘(c) TIER II INVESTMENT OPTIONS.— 

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

19 of amounts credited to each personal social security 

20 savings account, the Board shall provide by regula21 tion for investment in any of 3 alternative Tier II 

22 Investment Options which may be offered by any eli23 gible entity. Any such option shall consist of a less 

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1 ment option, or a more conservative investment op2 tion. 

3 ‘‘(2) ALTERNATIVE TIER II INVESTMENT OP4 TIONS.— 

5 ‘‘(A) LESS CONSERVATIVE INVESTMENT

6 OPTIONS.—Under a less conservative invest7 ment option, amounts credited to the partici8 pant’s personal social security savings account 

9 are held by the eligible entity so as to ensure, 

10 to the maximum extent practicable, that, of the 

11 total balance credited to the account and avail12 able for investment (after allowing for adminis13 trative expenses)— 

14 ‘‘(i) at least 85 percent but not more 

15 than 95 percent is invested in common 

16 stock, and 

17 ‘‘(ii) the remainder is invested in fixed 

18 income securities. 

19 For such purpose, the eligible entity shall offer 

20 the participant a choice of one or more port21 folios of each such type of investment. 

22 ‘‘(B) MODERATE INVESTMENT OPTIONS.— 

23 Under a moderate investment option, amounts 

24 credited to the participant’s personal social se25 curity savings account are held by the eligible 


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1 entity so as to ensure, to the maximum extent 

2 practicable, that, of the total balance credited 

3 to the account and available for investment 

4 (after allowing for administrative expenses)— 

5 ‘‘(i) at least 65 percent but less than 

6 75 percent is invested in common stock, 

7 and 

8 ‘‘(ii) the remainder is invested in fixed 

9 income securities. 

10 For such purpose, the eligible entity shall offer 

11 the participant a choice of one or more port12 folios of each such type of investment. 

13 ‘‘(C) MORE CONSERVATIVE INVESTMENT

14 OPTIONS.—Under a more conservative invest15 ment option, amounts credited to the partici16 pant’s personal social security savings account 

17 are held by the eligible entity so as to ensure, 

18 to the maximum extent practicable, that, of the 

19 total balance credited to the account and avail20 able for investment (after allowing for adminis21 trative expenses)— 

22 ‘‘(i) at least 45 percent but less than 

23 55 percent is invested in common stock, 

24 and 


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1 ‘‘(ii) the remainder is invested in fixed 

2 income securities. 

3 For such purpose, the eligible entity shall offer 

4 the participant a choice of one or more port5 folios of each such type of investment. 

6 ‘‘(3) ELECTIONS AMONG INVESTMENT OP7 TIONS.—Pursuant to the participant’s election filed 

8 in accordance with regulations of the Board, and 

9 subject to the terms of the investment options de10 scribed in paragraph (2) offered to the participant 

11 by the eligible entity and approved by the Board, the 

12 eligible entity offering any such investment option 

13 shall, in accordance with such regulations, provide 

14 for disinvestment and reinvestment of amounts cred15 ited to the participant’s personal social security sav16 ings account and held by the eligible entity in such 

17 investment option so as to provide for investment of 

18 amounts credited to the account in any of the other 

19 such investment options specified in such election. 

20 ‘‘(d) APPROVAL OF TIER II INVESTMENT OP21 TIONS.— 

22 ‘‘(1) IN GENERAL.—No funds may be trans23 ferred into a Tier II Investment Option unless the 

24 Board has approved an application submitted under 

25 paragraph (2) with respect to the option. 


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

2 II Investment Option that an eligible entity certified 

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

4 shall submit an application to the Board at such 

5 time, in such manner, and containing such informa6 tion as the Board may require. 

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

8 Board may not approve an application submitted 

9 under paragraph (2) in connection with a Tier II In10 vestment Option unless the following requirements 

11 are met: 

12 ‘‘(A) OPTION MUST BE OFFERED BY CER13 TIFIED ELIGIBLE ENTITY.—The Tier II Invest14 ment Option is offered by an eligible entity cer15 tified under subsection (b). 

16 ‘‘(B) OPTION MUST MEET QUALITY FAC17 TORS.— 

18 ‘‘(i) IN GENERAL.—The Tier II In19 vestment Option meets qualifications which 

20 shall be prescribed by the Board relating 

21 to the quality factors described in clause 

22 (ii). 

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

24 factors described in this clause are— 


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1 ‘‘(I) the safety and soundness of 

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

4 ‘‘(II) the experience and record 

5 of performance of the proposed Op6 tion, if any; 

7 ‘‘(III) the experience and record 

8 of performance of the entity issuing or 

9 offering such Option; and 

10 ‘‘(IV) such other factors as the 

11 Board may determine appropriate. 

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

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

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

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

22 ‘‘(3) give equal consideration to options offered 

23 by variously-sized banks (as defined in section 581 

24 of the Internal Revenue Code of 1986) or insured 

25 credit unions (within the meaning of section 101(7) 


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1 of the Federal Credit Union Act, 12 U.S.C. 

2 1752(7)) located in the United States; and 

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

4 entity or option on political or other extraneous con5 siderations. 

6 ‘‘(f) SPONSORSHIP OF TIER II INVESTMENT OPTIONS

7 BY MEMBERSHIP AND LABOR ORGANIZATIONS.— 

8 ‘‘(1) IN GENERAL.—A membership or labor or9 ganization (as defined by the Board) may sponsor 

10 Tier II Investment Options under contracts with eli11 gible entities certified under subsection (b) who shall 

12 administer the investment option if such investment 

13 option is approved by the Board under subsection 

14 (c). 

15 ‘‘(2) LIMITATION TO MEMBERSHIP.—A mem16 bership or labor organization (as so defined) may 

17 limit to the members of such organization participa18 tion in a Tier II Investment Option sponsored by 

19 such organization. 

20 ‘‘(g) DISTRIBUTIONS IN CASE OF DEATH.—Upon the 

21 death of a participant, the amount of any assets held 

22 under a Tier II Investment Option credited to the personal 

23 social security savings account of such individual shall be 

24 distributed in accordance with section 257(e). 


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1 ‘‘SEC. 257. PERSONAL SOCIAL SECURITY SAVINGS ANNUITY 

2 AND OTHER DISTRIBUTIONS. 

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

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

5 a participant from amounts credited to the personal social 

6 security savings account of such individual only on or after 

7 the date the participant attains retirement age (as defined 

8 in section 216(l)(1)) or, if elected by the participant, the 

9 early retirement age (as defined in section 216(l)(2)) ap10 plicable for old-age insurance benefits. 

11 ‘‘(b) PERSONAL SOCIAL SECURITY SAVINGS ANNU12 ITIES.— 

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

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

15 the Board shall notify each participant of— 

16 ‘‘(A) the most recent listing of personal so17 cial security savings annuities offered by the 

18 Annuity Issuance Authority under paragraph 

19 (2); and 

20 ‘‘(B) the entitlement of the participant to 

21 purchase such an annuity. 

22 ‘‘(2) ANNUITY ISSUANCE AUTHORITY.—There is 

23 established in the office of the Board an agency 

24 which shall be known as the ‘Annuity Issuance Au25 thority’. The Authority shall provide, in accordance 

26 with regulations of the Board, for the issuance of 


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1 personal social security savings annuities for pur2 chase from the Authority under this section and to 

3 otherwise administer the issuance of such annuities 

4 in accordance with such regulations. 

5 ‘‘(3) ANNUITY RESERVES ACCOUNT.—There is 

6 established in the Savings Fund an Annuity Re7 serves Account. The Account shall consist of all 

8 amounts received by the Authority from the pur9 chase of personal social security savings annuities 

10 under this section (plus such amounts as may be 

11 transferred to the Account under paragraph (5)(B)), 

12 increased by the total net earnings from investments 

13 of such reserves under subparagraph (A) of para14 graph (5) and reduced by the total net losses from 

15 investments of such reserves under such subpara16 graph. 

17 ‘‘(4) PURCHASE OF ANNUITIES.— 

18 ‘‘(A) SELECTION OF ANNUITY.—On a date 

19 elected by the participant, but no earlier than 

20 the date determined under subsection (a), a 

21 participant may purchase a personal social se22 curity savings annuity selected from among the 

23 annuities offered by the Authority under para24 graph (2). 


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1 ‘‘(B) TRANSFER OF ASSETS.—Upon the 

2 selection of an annuity by a participant under 

3 subparagraph (A), the Board shall provide for 

4 the transfer of assets, credited to the personal 

5 social security savings account of the partici6 pant and held in the Tier I Investment Fund 

7 or under 1 or more Tier II Investment Options 

8 (or any combination thereof), in a total amount 

9 sufficient to purchase the annuity selected by 

10 the participant from annuities offered by the 

11 Authority. 

12 ‘‘(C) MINIMUM ANNUITY PAYMENT

13 AMOUNT.— 

14 ‘‘(i) IN GENERAL.—Subject to sub15 paragraph (D), if, at the time a personal 

16 social security savings annuity is pur17 chased under subparagraph (A), the assets 

18 credited to the personal social security sav19 ings account of the participant are suffi20 cient to purchase a personal social security 

21 savings annuity offered by the Authority 

22 under paragraph (2) with a monthly annu23 ity payment that is at least equal to the 

24 minimum annuity payment amount, the 

25 amount of the monthly annuity payment 


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1 provided by such annuity may not be less 

2 than the minimum annuity payment 

3 amount. 

4 ‘‘(ii) CONSTRUCTION.—Nothing in 

5 this subparagraph shall be construed to 

6 prohibit a participant from using personal 

7 social security savings account assets to 

8 purchase a personal social security savings 

9 annuity offered by the Authority under 

10 paragraph (2) which provides for a month11 ly payment in excess of the minimum 

12 amount required under clause (i). 

13 ‘‘(iii) MINIMUM ANNUITY PAYMENT

14 AMOUNT DEFINED.—For purposes of this 

15 part, the term ‘minimum annuity payment 

16 amount’ means, as of any date, an amount 

17 equal to one-half of the old-age insurance 

18 benefit under section 202(a) of a partici19 pant under part B and any other monthly 

20 insurance benefit under such section based 

21 on the participant’s wages and self-employ22 ment income (as determined before apply23 ing any reduction or deduction otherwise 

24 applicable under this title and without re25 gard to subsection (z)). 


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1 ‘‘(iv) ASSUMPTIONS.—For purposes of 

2 making actuarial determinations relating 

3 to the amounts of annuities offered by the 

4 Authority under this section and the 

5 amounts necessary for the purchase of 

6 such annuities, the Authority shall project 

7 returns from the investment, in accordance 

8 with paragraph (5)(A), of the reserves held 

9 in the Annuities Reserves Account. The 

10 projection by the Authority of such returns 

11 shall be made under assumptions of long12 term average returns of equities and fixed 

13 income instruments which shall be issued 

14 annually by the Board of Trustees of the 

15 Federal Old-Age and Survivors Insurance 

16 Trust Fund and the Federal Disability In17 surance Trust Fund, based on analysis of 

18 historical market returns. 

19 ‘‘(D) PURCHASE OF ANNUITIES IN THE

20 EVENT OF INSUFFICIENT ASSETS.—If, as of the 

21 date determined under subsection (a), the as22 sets credited to a participant’s personal social 

23 security savings account are insufficient to pur24 chase a personal social security savings annuity 

25 that provides for a monthly payment that is at 


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1 least equal to the minimum annuity payment 

2 amount (as defined in paragraph (4)(C)(iii)), 

3 the participant may purchase a personal social 

4 security savings annuity with a monthly pay5 ment equal to the maximum amount that the 

6 participant’s personal social security savings ac7 count can fund, as determined in accordance 

8 with regulations which shall be prescribed by 

9 the Authority, and that otherwise meets the re10 quirements of this subsection (including the 

11 cost-of-living protection requirement of sub12 section (c)(1)(C)). 

13 ‘‘(5) INVESTMENT OF RESERVES FOR PAYMENT

14 OF ANNUITIES.—For purposes of investment of re15 serves held in the Annuity Reserves Account, the 

16 Authority shall contract with appropriate investment 

17 managers, recordkeepers, and custodians selected by 

18 the Authority for investment of such reserves. Such 

19 reserves shall be invested under regulations which 

20 shall be prescribed by the Authority so as to ensure, 

21 to the maximum extent practicable, that, of the total 

22 balance of the reserves (after payment of adminis23 trative expenses to such managers, recordkeepers, 

24 and custodians)— 


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1 ‘‘(A) 65 percent is invested in equities in 

2 the same manner and under the same stand3 ards as are provided in section 255(b)(4), and 

4 ‘‘(B) 35 percent is invested in fixed income 

5 instruments in the same manner and under the 

6 same standards as are provided in section 

7 255(b)(5). 

8 ‘‘(c) PERSONAL SOCIAL SECURITY SAVINGS ANNU9 ITY.— 

10 ‘‘(1) IN GENERAL.—For purposes of this part, 

11 the term ‘personal social security savings annuity’ 

12 means an annuity that meets the following require13 ments: 

14 ‘‘(A) The annuity starting date (as defined 

15 in section 72(c)(4) of the Internal Revenue 

16 Code of 1986) commences on the first day of 

17 the month beginning after the date of the pur18 chase of the annuity. 

19 ‘‘(B) The terms of the annuity provide— 

20 ‘‘(i) for a monthly payment to the 

21 participant during the life of the partici22 pant equal to at least the minimum annu23 ity payment amount (as defined in sub24 section (b)(4)(C)(iii)), or 


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1 ‘‘(ii) in the case of an annuity pur2 chased under subparagraph (D) of sub3 section (b)(4), the maximum monthly pay4 ment determined under regulations pre5 scribed under such subparagraph. 

6 ‘‘(C) The terms of the annuity include pro7 cedures providing for adjustments in the 

8 amount of the monthly payments in the same 

9 manner and to the same extent as adjustments 

10 are provided for under the procedures used to 

11 adjust benefit amounts under section 

12 215(i)(2)(A). Nothing in this subparagraph 

13 shall be construed to preclude the terms gov14 erning such an annuity from providing for ad15 justments in the amount of monthly payments 

16 resulting in a payment for any month greater 

17 than the payment for that month that would re18 sult from adjustments required under the pre19 ceding sentence. 

20 ‘‘(D) The terms of the annuity include 

21 such other terms and conditions as the Board 

22 requires for the protection of the annuitant. 

23 ‘‘(2) EXEMPTION FROM THIRD PARTY

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1 nuity shall be exempt from any and all third party 

2 claims against the issuer. 

3 ‘‘(d) RIGHT TO CASH OUT PERSONAL SOCIAL SECU4 RITY SAVINGS ACCOUNT ASSETS.—To the extent assets 

5 credited to a participant’s personal social security savings 

6 account are not used to purchase an annuity under sub7 section (b), the assets not so used shall be payable to the 

8 participant at such time (in accordance with subsection 

9 (a)), in such manner, and in such amounts as the partici10 pant may specify. 

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

12 participant dies before all amounts which are held in the 

13 Tier I Investment Fund of the Savings Fund or held 

14 under a Tier II Investment Option and which are credited 

15 to the personal social security savings account of the indi16 vidual are otherwise distributed in accordance with this 

17 section, such amounts shall be distributed, under regula18 tions which shall be prescribed by the Board— 

19 ‘‘(1) in any case in which one or more bene20 ficiaries have been designated in advance, to such 

21 beneficiaries in accordance with such designation as 

22 provided in such regulations, and 

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

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

25 estate. 


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1 ‘‘SEC. 258. GUARANTEE OF PROMISED SOCIAL SECURITY 

2 BENEFITS. 

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

4 month ending after the date on which a participant attains 

5 retirement age (as defined in section 216(l)(1))— 

6 ‘‘(1) such participant’s assumed normal total 

7 part A retirement benefit for such month, exceeds 

8 ‘‘(2) the sum of— 

9 ‘‘(A) the monthly payment which is pay10 able (or would be payable) for such month 

11 under a personal social security savings annuity 

12 with a monthly payment equal to the maximum 

13 amount that the participant’s personal social 

14 security savings account can fund (irrespective 

15 of whether such an annuity is purchased and of 

16 the amount of the monthly payment actually 

17 payable under any personal social security sav18 ings annuity which is purchased), and 

19 ‘‘(B) such participant’s assumed actual 

20 total part A retirement benefit for such month, 

21 the Secretary of the Treasury shall pay to such individual 

22 for such month, from amounts in the general fund of the 

23 Treasury (subject to section 6 of the Personal Social Secu24 rity Savings Guarantee and Prosperity Act of 2011), an 

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


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1 amount described in paragraph (1) over the amount de2 scribed in paragraph (2). 

3 ‘‘(b) DEFINITIONS.—For purposes of this section— 

4 ‘‘(1) ASSUMED NORMAL TOTAL PART A RETIRE5 MENT BENEFIT.—The term ‘assumed normal total 

6 retirement part A benefit’ means, in connection with 

7 a participant, the total amount of the monthly insur8 ance benefits under section 202 based on such par9 ticipant’s wages and self-employment income that 

10 would have been payable (as adjusted by taking into 

11 account adjustments under section 215(i)) if— 

12 ‘‘(A) section 202(z) did not apply, and 

13 ‘‘(B) all the beneficiaries had applied for 

14 such benefits during the month in which occurs 

15 the date on which the participant attains retire16 ment age (as defined in section 216(l)(1)). 

17 ‘‘(2) ASSUMED ACTUAL TOTAL PART A RETIRE18 MENT BENEFIT.—The term ‘assumed actual total 

19 part A retirement benefit’ means, in connection with 

20 a participant, the total amount of the monthly insur21 ance benefits under section 202 based on such par22 ticipant’s wages and self-employment income that 

23 would have been payable (after applying section 

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1 ficiaries had applied for such benefits during the 

2 month in which such participant attains retirement 

3 age (as defined in section 216(l)(1)). For purposes 

4 of this paragraph, any entitlement of an individual 

5 to such benefits for which an application may have 

6 been filed prior to such month shall be disregarded. 

7 ‘‘SEC. 259. PERSONAL SOCIAL SECURITY SAVINGS BOARD. 

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

9 executive branch of the Government a Personal Social Se10 curity Savings Board. 

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

12 of— 

13 ‘‘(1) 3 members appointed by the President, of 

14 whom 1 shall be designated by the President as 

15 Chairman; and 

16 ‘‘(2) 2 members appointed by the President, of 

17 whom— 

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

19 after taking into consideration the recommenda20 tion made by the Speaker of the House of Rep21 resentatives in consultation with the minority 

22 leader of the House of Representatives; and 

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

24 after taking into consideration the recommenda25 tion made by the majority leader of the Senate 


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1 in consultation with the minority leader of the 

2 Senate. 

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

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

5 consent of the Senate. 

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

7 the Board shall have substantial experience, training, and 

8 expertise in the management of financial investments and 

9 pension benefit plans. 

10 ‘‘(e) LENGTH OF APPOINTMENTS.— 

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

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

13 members first appointed under subsection (b)— 

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

15 a term of 4 years; 

16 ‘‘(B) the members appointed under sub17 section (b)(2) shall be appointed for terms of 3 

18 years; and 

19 ‘‘(C) the remaining members shall be ap20 pointed for terms of 2 years. 

21 ‘‘(2) VACANCIES.— 

22 ‘‘(A) IN GENERAL.—A vacancy on the 

23 Board shall be filled in the manner in which the 

24 original appointment was made and shall be 


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1 subject to any conditions that applied with re2 spect to the original appointment. 

3 ‘‘(B) COMPLETION OF TERM.—An indi4 vidual chosen to fill a vacancy shall be ap5 pointed for the unexpired term of the member 

6 replaced. 

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

8 shall not expire before the date on which the mem9 ber’s successor takes office. 

10 ‘‘(f) DUTIES.—The Board shall— 

11 ‘‘(1) administer the program established under 

12 this part and issue regulations necessary for the ad13 ministration of such program; 

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

15 management of the Savings Fund, including the 

16 Tier I Investment Fund, and amounts held under 

17 Tier II Investment Options, including policies appli18 cable to the asset managers, recordkeepers, and 

19 custodians with responsibility for managing the in20 vestment of amounts credited to personal social se21 curity investment accounts, and for the management 

22 and operation of personal social security savings an23 nuities, which shall provide for— 


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1 ‘‘(A) prudent investments suitable for ac2 cumulating funds for payment of retirement in3 come; 

4 ‘‘(B) sound management practices; and 

5 ‘‘(C) low administrative costs; 

6 ‘‘(3) review the performance of investments 

7 made for the Tier I Investment Fund; 

8 ‘‘(4) review the performance of investments 

9 made under Tier II Investment Options; 

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

11 personal social security savings annuities; 

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

13 Board; and 

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

15 part 4 of subtitle B of title I of the Employee Re16 tirement Income Security Act of 1974 (relating to fi17 duciary responsibility) in connection with any exer18 cise of discretion in connection with the assets of the 

19 Savings Fund. 

20 ‘‘(g) ADMINISTRATIVE PROVISIONS.— 

21 ‘‘(1) IN GENERAL.—The Board may— 

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

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

24 direct the Executive Director to take such ac25 tion as the Board considers appropriate to 


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1 carry out the provisions of this part and the 

2 policies of the Board in accordance with delega3 tions under this part; 

4 ‘‘(C) upon the concurring votes of 4 mem5 bers, remove the Executive Director from office 

6 for good cause shown; 

7 ‘‘(D) provide to the Executive Director 

8 such resources as are necessary to carry out the 

9 duties of the Executive Director; and 

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

11 necessary to carry out the functions of the 

12 Board. 

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

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

15 month; and 

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

17 Chairman. 

18 ‘‘(3) EXERCISE OF POWERS.— 

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

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

21 functions and exercise the powers of the Board 

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

23 Three members of the Board shall constitute a 

24 quorum for the transaction of business. 


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1 ‘‘(B) VACANCIES.—A vacancy on the 

2 Board shall not impair the authority of a 

3 quorum of the Board to perform the functions 

4 and exercise the powers of the Board. 

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

6 Board may not direct any person— 

7 ‘‘(A) to invest, or to cause to be invested, 

8 in any specific asset any sums which are in the 

9 Tier I Investment Fund or which are otherwise 

10 credited to any personal social security invest11 ment account, or 

12 ‘‘(B) to dispose of, or cause to be disposed 

13 of, any specific asset of such Fund or any such 

14 account. 

15 ‘‘(h) COMPENSATION.— 

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

17 who is not an officer or employee of the Federal 

18 Government shall be compensated at the daily rate 

19 of basic pay for level IV of the Executive Schedule 

20 for each day during which such member is engaged 

21 in performing a function of the Board. 

22 ‘‘(2) EXPENSES.—A member of the Board shall 

23 be paid travel, per diem, and other necessary ex24 penses under subchapter I of chapter 57 of title 5, 

25 United States Code, while traveling away from such 


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

2 performance of the duties of the Board. 

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

4 under this subsection shall be paid from the Tier I 

5 Investment Fund, as determined appropriate by the 

6 Board. 

7 ‘‘(i) DISCHARGE OF RESPONSIBILITIES.—The mem8 bers of the Board shall discharge their responsibilities 

9 solely in the interest of the participants and their bene10 ficiaries under this part. 

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

12 shall annually engage an independent qualified public ac13 countant to audit the activities of the Board. 

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

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

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

17 an annual budget of the expenses and other items relating 

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

19 in the budget required to be transmitted to Congress 

20 under section 1105 of title 31, United States Code. 

21 ‘‘(l) SUBMISSION OF LEGISLATIVE RECOMMENDA22 TIONS.—The Board may submit to the President, and, at 

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

24 any legislative recommendations of the Board relating to 


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

2 of law. 

3 ‘‘SEC. 260. EXECUTIVE DIRECTOR. 

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

5 Board shall appoint, without regard to the provisions of 

6 law governing appointments in the competitive service, an 

7 Executive Director by action agreed to by a majority of 

8 the members of the Board. 

9 ‘‘(b) DUTIES.—The Executive Director shall, as de10 termined appropriate by the Board— 

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

12 Board; 

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

14 Fund in accordance with the investment policies and 

15 other policies established by the Board; 

16 ‘‘(3) administer the provisions of this part re17 lating to the Tier I Investment Fund; and 

18 ‘‘(4) prescribe such regulations (other than reg19 ulations relating to fiduciary responsibilities) as may 

20 be necessary for the administration of this part re21 lating to the Tier I Investment Fund. 

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

23 Director may, within the scope of the duties of the Execu24 tive Director as determined by the Board— 


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1 ‘‘(1) appoint such personnel as may be nec2 essary to carry out the provisions of this part relat3 ing to the Tier I Investment Fund; 

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

5 the services of experts and consultants under section 

6 3109 of title 5, United States Code; 

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

8 the United States Postal Service, or the Postal Rate 

9 Commission any information necessary to carry out 

10 the provisions of this part and the policies of the 

11 Board relating to the Tier I Investment Fund; 

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

13 Tier I Investment Fund as the Executive Director 

14 determines, in accordance with regulations of the 

15 Board, are necessary to carry out the provisions of 

16 this part and the policies of the Board; 

17 ‘‘(5) pay the compensation, per diem, and travel 

18 expenses of individuals appointed under paragraphs 

19 (1), (2), and (6) from the Tier I Investment Fund, 

20 in accordance with regulations of the Board; 

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

22 employed intermittently in the Government service 

23 and reimburse such individuals for travel expenses, 

24 authorized by section 5703 of title 5, United States 


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1 Code, including per diem as authorized by section 

2 5702 of such title; 

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

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

5 Executive Director’s functions to such employees 

6 under the Board as the Executive Director may des7 ignate and authorize such successive redelegations of 

8 such functions to such employees under the Board 

9 as the Executive Director may consider to be nec10 essary or appropriate; and 

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

12 to carry out the functions of the Executive Direc13 tor.’’. 

14 SEC. 3. MONTHLY INSURANCE BENEFITS IN CONNECTION 

15 WITH PARTICIPANTS IN THE PERSONAL SO16 CIAL SECURITY SAVINGS PROGRAM. 

17 Section 202 of the Social Security Act (42 U.S.C. 

18 402) is amended by adding at the end the following new 

19 subsection: 

20 ‘‘Benefits in the Case of Participants Under Part B 

21 ‘‘(z)(1) Notwithstanding any other provision of this 

22 title, subject to paragraphs (2) and (3), the amount of 

23 any old-age insurance benefit under subsection (a) of a 

24 participant under part B and any other monthly insurance 

25 benefit under this section based on the participant’s wages 


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1 and self-employment income (as determined before apply2 ing any reduction or deduction otherwise applicable under 

3 this title) shall be reduced by a percentage equal to the 

4 product derived by multiplying 50 percent by a fraction— 

5 ‘‘(A) the numerator of which is the present 

6 value of the total amount of the contributions made 

7 with respect to the participant to the Personal Social 

8 Security Savings Fund under section 254, and 

9 ‘‘(B) the denominator of which is the present 

10 value of the total amount of the contributions which 

11 would have been made with respect to the partici12 pant to the Personal Social Security Savings Fund 

13 under section 254 if contributions under section 254 

14 had been made with respect to such participant for 

15 all of such participant’s benefit computation years 

16 (as defined in 215(b)(2)(B)((i)), determined— 

17 ‘‘(i) as if the program established by this 

18 part had been in effect as of the beginning of 

19 such participant’s first benefit computation 

20 year, and 

21 ‘‘(ii) without regard to section 6 of the 

22 Save Social Security Act. 

23 ‘‘(2) Paragraph (1) shall not apply with respect to 

24 child’s insurance benefits under subsection (d) or mother’s 

25 or father’s insurance benefits under subsection (g). 


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1 ‘‘(3) In the case of old-age insurance benefits of an 

2 individual who was entitled to disability insurance benefits 

3 under section 223 for the month preceding the month in 

4 which such individual attained retirement age (as defined 

5 in section 216(l)), such benefit shall be subject to a reduc6 tion under this subsection, in lieu of the reduction other7 wise applicable under paragraph (1), equal to the product 

8 derived by multiplying— 

9 ‘‘(A) the amount of such reduction otherwise 

10 applicable, by 

11 ‘‘(B) a fraction— 

12 ‘‘(i) the numerator of which is the number 

13 of calendar years, ending after the participant 

14 attained age 21 and beginning before the date 

15 on which the participant attained age 61, dur16 ing each of which the participant was not enti17 tled to disability insurance benefits under sec18 tion 223 or was so entitled for fewer than 6 

19 months, to 

20 ‘‘(ii) 40.’’. 

21 SEC. 4. TAX TREATMENT OF ACCOUNTS. 

22 (a) PERSONAL SOCIAL SECURITY SAVINGS PRO23 GRAM.—Subchapter F of chapter 1 of the Internal Rev24 enue Code of 1986 (relating to exempt organizations) is 

25 amended by adding at the end the following new part: 


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1 ‘‘PART IX—PERSONAL SOCIAL SECURITY 

2 SAVINGS PROGRAM 

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

3 ‘‘SEC. 530A. PERSONAL SOCIAL SECURITY SAVINGS PRO4 GRAM. 

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

6 Savings Fund and each Tier II Investment Option are ex7 empt from taxation under this subtitle. Notwithstanding 

8 the preceding sentence, sums in a personal social security 

9 savings account which are attributable to a Tier II Option 

10 shall be subject to the taxes imposed by section 511 (relat11 ing to imposition of tax on unrelated business income of 

12 charitable, etc. organizations). 

13 ‘‘(b) DISTRIBUTIONS TAXED AS SOCIAL SECURITY

14 BENEFITS.—See section 86 for tax treatment of distribu15 tions from personal social security savings accounts and 

16 personal social security annuity as social security benefits. 

17 ‘‘(c) ESTATE TAX TREATMENT.—No amount shall be 

18 includible in the gross estate of any individual for pur19 poses of chapter 11 by reason of an interest in the Tier 

20 I Investment Fund of the Personal Social Security Sav21 ings Fund or held under a Tier II Investment Option and 

22 which is credited to the personal social security savings 

23 account of the individual. 

24 ‘‘(d) DEFINITIONS.—For purposes of this section— 


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1 ‘‘(1) PERSONAL SOCIAL SECURITY SAVINGS AC2 COUNT.—The term ‘personal social security savings 

3 account’ means an account established under section 

4 253(b) of the Social Security Act. 

5 ‘‘(2) PERSONAL SOCIAL SECURITY SAVINGS AN6 NUITY.—The term ‘personal social security savings 

7 annuity’ means an annuity purchased under section 

8 257 of the Social Security Act. 

9 ‘‘(3) PERSONAL SOCIAL SECURITY SAVINGS

10 FUND.—The term ‘Personal Social Security Savings 

11 Fund’ means the Savings Fund established under 

12 section 252 of the Social Security Act. 

13 ‘‘(4) TIER I INVESTMENT FUND.—The term 

14 ‘Tier I Investment Fund’ has the meaning given 

15 such term by section 251(8) of the Social Security 

16 Act. 

17 ‘‘(5) TIER II INVESTMENT OPTION.—The term 

18 ‘Tier II Investment Option’ has the meaning given 

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

20 Act.’’. 

21 (b) ANNUITY AND GUARANTEE PAYMENTS.—Para22 graph (1) of section 86(d) of the Internal Revenue Code 

23 of 1986 is amended to read as follows: 


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1 ‘‘(1) IN GENERAL.—For purposes of this sec2 tion, the term ‘social security benefit’ means any 

3 amount received by the taxpayer— 

4 ‘‘(A) by reason of entitlement to— 

5 ‘‘(i) a monthly benefit under title II of 

6 the Social Security Act, 

7 ‘‘(ii) a tier 1 railroad retirement ben8 efit, or 

9 ‘‘(iii) a payment under section 258 of 

10 the Social Security Act (relating to guar11 antee of promised Social Security benefits), 

12 or 

13 ‘‘(B) as a payment from a personal social 

14 security savings account or a personal social se15 curity savings annuity under section 257 of the 

16 Social Security Act.’’. 

17 (1) CLERICAL AMENDMENT.—The table of 

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

19 amended by adding after the item relating to part 

20 VIII the following new item: 

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

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

22 this section shall apply to taxable years beginning after 

23 December 31, 2011. 


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1 SEC. 5. REIMBURSEMENT OF SPENDING REDUCTION AC2 COUNT FROM SAVINGS RESULTING FROM 

3 PERSONAL SOCIAL SECURITY SAVINGS PRO4 GRAM. 

5 Section 201 of the Social Security Act (42 U.S.C. 

6 401) is amended by adding at the end the following new 

7 subsection: 

8 ‘‘(o)(1) At the end of any reimbursement year, the 

9 Managing Trustee shall transfer from the Federal Old10 Age and Survivors Insurance Trust Fund and the Federal 

11 Disability Insurance Trust Fund (hereinafter in this sub12 section referred to as the ‘Trust Funds’) to the Spending 

13 Reduction Account of the Treasury, in amounts deter14 mined appropriate by the Managing Trustee in relation 

15 to each of the Trust Funds, such sums as are necessary 

16 to reimburse the Spending Reduction Account an amount 

17 equal to the reimbursement amount for such year. 

18 ‘‘(2) For purposes of this subsection— 

19 ‘‘(A) The term ‘reimbursement year’ means a 

20 year for which, as estimated by the Managing Trust21 ee, there is a Savings Program excess balance in the 

22 Trust Funds at the end of such year. In determining 

23 the amount of any excess under this subparagraph, 

24 the Managing Trustee shall disregard any excess in 

25 the Trust Funds which would be attributable to the 

26 operation of such Trust Funds if this Act had not 


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1 been enacted. The estimation made pursuant to this 

2 subparagraph for a reimbursement year shall be 

3 made not later than November 1 of such reimburse4 ment year. 

5 ‘‘(B) The term ‘Savings Program excess bal6 ance’ for a year means an amount by which the total 

7 balance in the Trust Funds at the end of such year 

8 exceeds (before the application of this subsection) 

9 100 percent of the total amount of benefits to be 

10 payable from the Trust Funds for the succeeding 

11 year. In determining the amount of any excess under 

12 this subparagraph, the Managing Trustee shall treat 

13 as excess in the Trust Funds only the amount by 

14 which the excess is greater than the amount which 

15 would be the excess in the Trust Funds if the Save 

16 Social Security Act had not been enacted. 

17 ‘‘(C) The term ‘reimbursement amount’ for a 

18 reimbursement year means the lesser of— 

19 ‘‘(i) the total amount of payments made 

20 during such year and prior years from the 

21 Spending Reduction Account of the Treasury 

22 under sections 254 and 258 for which reim23 bursement has not been made under paragraph 

24 (1), including interest at a rate equal to the 

25 rate applicable from time to time for obligations 


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1 issued to the Trust Funds under subsection (d), 

2 or 

3 ‘‘(ii) the Savings Program excess balance 

4 for the reimbursement year. 

5 ‘‘(3) The total amount transferred under paragraph 

6 (1) as the reimbursement amount for any reimbursement 

7 year shall be available, until expended— 

8 ‘‘(A) first, for reimbursement of the amount of 

9 payments made under section 254 during the reim10 bursement year, 

11 ‘‘(B) second, for reimbursement of the amount 

12 of payments made under section 258 during the re13 imbursement year, 

14 ‘‘(C) third, for reimbursement of any unreim15 bursed amount of payments made under section 254 

16 during prior years, together with interest accrued on 

17 such amount, and 

18 ‘‘(D) finally, for reimbursement of any unreim19 bursed amount of payments made under section 258 

20 during prior years, together with interest accrued on 

21 such amount.’’. 


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1 SEC. 6. FUNDING OF PERSONAL SOCIAL SECURITY SAVINGS 

2 PROGRAM FROM CREDITS FOR REDUCTIONS 

3 IN FEDERAL SPENDING. 

4 (a) SPENDING REDUCTION ACCOUNT.—There is es5 tablished in the Treasury of the United States a Personal 

6 Social Security Savings Program Spending Reduction Ac7 count (hereafter in this section referred to as the ‘‘Spend8 ing Reduction Account’’. 

9 (b) EXPENDITURES FROM GENERAL FUND OF

10 TREASURY LIMITED TO AMOUNTS CREDITED TO SPEND11 ING REDUCTION ACCOUNT.— 

12 (1) IN GENERAL.—Amounts which, but for this 

13 section, would otherwise be payable from the general 

14 fund of the Treasury to carry out section 254(a)(2) 

15 and 258(a) of the Social Security Act (as added by 

16 this Act) shall be payable only from the Spending 

17 Reduction Account and only to the extent of the 

18 available balance in such Account, as provided in 

19 this section. 

20 (2) CREDITING TO SPENDING REDUCTION AC21 COUNT OF AMOUNTS SAVED FROM PROGRAM REDUC22 TIONS.— 

23 (A) IN GENERAL.—From time to time dur24 ing each fiscal year, the Secretary of the Treas25 ury shall credit to the Spending Reduction Ac26 count the amount of savings to the Treasury 


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1 for such fiscal year derived (as determined by 

2 such Secretary in consultation with the Director 

3 of Office of Management and Budget) from leg4 islation providing for the reduction or termi5 nation of Federal programs which were in effect 

6 on the date of the enactment of this Act. To the 

7 extent that any such legislation provides for 

8 savings with respect to multiple fiscal years, the 

9 Secretary of the Treasury shall provide for 

10 crediting to the Spending Reduction Account 

11 for each such fiscal year of the amount of sav12 ings properly attributable to such fiscal year 

13 pursuant to such legislation. 

14 (B) ANNUAL REPORT OF AMOUNTS IN

15 FUND NECESSARY FOR FULL FUNDING OF PAY16 MENTS.—Not later than April 15 preceding 

17 each fiscal year beginning on or after October 

18 1, 2012, the Director of the Office of Manage19 ment and Budget— 

20 (i) shall, in consultation with the Per21 sonal Social Security Savings Board, re22 port to each House of the Congress the 

23 amount determined by the Board, based on 

24 reasonable projections, as necessary to pro25 vide for timely payment in full of amounts 


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1 otherwise payable, but for this section, 

2 from the Spending Reduction Account for 

3 such fiscal year, and 

4 (ii) shall include in such report rec5 ommendations for reductions or termi6 nations of Federal programs in effect on 

7 the date of the enactment of this Act nec8 essary to provide for savings sufficient to 

9 provide for crediting of funds to the 

10 Spending Reduction Account sufficient to 

11 provide for payments under sections 

12 254(a)(2) and 258(a) of the Social Secu13 rity Act. 

14 (3) REDUCTION IN PAYMENTS AS NECESSARY

15 COMMENSURATE WITH EXTENT OF REDUCTIONS IN

16 OTHER PROGRAMS.— 

17 (A) IN GENERAL.—The total amount pay18 able under sections 254(a)(2) and 258(a) of the 

19 Social Security Act for any fiscal year shall be 

20 payable only to the extent of the total amount 

21 that the Director of the Office of Management 

22 and Budget determines, based on reasonable 

23 projections made in advance of such fiscal year 

24 and reported pursuant to subparagraph (B), 

25 will be credited to the Spending Reduction AcVerDate Mar 15 2010 04:56 Sep 13, 2011 Jkt 099200 PO 00000 Frm 00065 Fmt 6652 Sfmt 6201 E:\BILLS\H2889.IH H2889

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1 count for such fiscal year pursuant to para2 graph (2) (plus any amounts remaining for ex3 penditure pursuant to subparagraph (D)). 

4 (B) ANNUAL REPORT OF OMB REGARDING

5 SUFFICIENCY OF FUND.—The Director shall set 

6 forth the determination made under subpara7 graph (A) with respect to each fiscal year in a 

8 report to each House of the Congress not later 

9 than September 1 preceding such fiscal year, 

10 based on legislation enacted prior to such date. 

11 (C) PRO RATA REDUCTIONS IN CASE OF

12 INSUFFICIENCY.—In any case in which the de13 termination made under subparagraph (A) for 

14 any fiscal year indicates, as determined by the 

15 Director, a projected insufficiency for such fis16 cal year in the balance of the Spending Reduc17 tion Account to make all payments from the 

18 Spending Reduction Account during such fiscal 

19 year in full when otherwise due, such payments 

20 shall be reduced on a pro rata basis in relation 

21 to the projected amounts available from time to 

22 time in the Spending Reduction Account for 

23 such payments during the fiscal year. 

24 (D) RESTORATION OF REDUCED PAY25 MENTS.—In any case in which, as of the end of 


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1 any fiscal year, a balance remains in the Spend2 ing Reduction Account after payment in full 

3 when due of all payments payable during such 

4 fiscal year, additional payments shall be made 

5 from such balance so as to restore, to the max6 imum extent practicable, payments which were 

7 made in prior fiscal years in reduced amounts 

8 pursuant to this subparagraph to amounts con9 stituting payment in full of such payments. 

10 (E) CARRYOVER OF ACCOUNT BAL11 ANCES.—Amounts credited to the Spending Re12 duction Account for a fiscal year which are not 

13 expended as of the end of such fiscal year shall 

14 remain available for expenditure in subsequent 

15 fiscal years until expended. 

16 (4) LIMITATIONS.— 

17 (A) Savings for any fiscal year may only be 

18 taken into account under paragraph (2) once. 

19 (B) Savings taken into account under 

20 paragraph (2) may not be taken into account 

21 for the purposes of any other spending reduc22 tion account. 

23 (C) Notwithstanding any other provision of 

24 law, no provision of any amendment made by 

25 this title may be carried out except to the exVerDate Mar 15 2010 04:56 Sep 13, 2011 Jkt 099200 PO 00000 Frm 00067 Fmt 6652 Sfmt 6201 E:\BILLS\H2889.IH H2889

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1 tent that funds for such provision are provided 

2 for such purpose from the Spending Reduction 

3 Account. The Secretary of the Treasury shall 

4 make such additional pro rata reductions in 

5 payments for any fiscal year to the extent nec6 essary for compliance with the preceding sen7 tence. 

8 (5) LOCKBOX.— 

9 (A) GENERAL RULE.—Savings credited 

10 under paragraph (2) to the Spending Reduction 

11 Account may not be transferred or spent for 

12 any purpose other than to carry out the provi13 sions of this Act and the amendments made 

14 thereby. 

15 (B) ENFORCEMENT.—If any amount is 

16 transferred or spent in violation of subpara17 graph (A), no amount may be transferred to 

18 the Savings Reduction Account on and after the 

19 date of such violation. The determination of 

20 whether an amount is transferred or spent in 

21 violation of subparagraph (A) shall be made ir22 respective of whether such provision of law is a 

23 subsequently enacted provision or directly or in24 directly seeks to waive the application of this 

25 paragraph. 


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1 SEC. 7. INTERIM FINANCING OF THE SOCIAL SECURITY 

2 TRUST FUNDS. 

3 Subsection (l) of section 201 of the Social Security 

4 Act (42 U.S.C. 401(l)) is amended to read as follows: 

5 ‘‘(l)(1) If at any time on or after January 1, 2012, 

6 the Managing Trustee determines that borrowing author7 ized under this subsection is necessary in order to ensure 

8 that sufficient assets are available in the Federal Old-Age 

9 and Survivors Insurance Trust Fund or the Federal Dis10 ability Insurance Trust Fund to provide for timely pay11 ment in full of benefits from such Trust Fund, the Man12 aging Trustee may borrow such amounts as the Managing 

13 Trustee determines to be appropriate from the general 

14 fund of the Treasury for transfer to and deposit in such 

15 Trust Fund. 

16 ‘‘(2) If in any month after a loan has been made to 

17 either Trust Fund under paragraph (1), the Managing 

18 Trustee determines that the assets of such Trust Fund 

19 are sufficient to permit repayment of all or part of any 

20 loans made to such Trust Fund under paragraph (1), the 

21 Managing Trustee shall make such repayments as the 

22 Managing Trustee determines to be appropriate to provide 

23 for prompt repayment of the loans, together with accumu24 lated interest. Interest shall accumulate on the unpaid bal25 ance of the loan at a rate equal to the rate applicable on 


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1 the date of the loan for obligations issued to the Trust 

2 Fund under subsection (d). 

3 ‘‘(3) The Board of Trustees shall make a timely re4 port to the Congress of any amounts transferred under 

5 this subsection.’’. 

Æ 


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