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103D CONGRESS
1ST SESSION
H. R. 367
To amend title II of the Social Security Act to provide for the investment
of the Trust Fund in the same investments permitted by pension funds
guaranteed by the Employee Retirement Income Security Act and to
require the Trustees to meet the same prudent person standards required
under that Act.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 5, 1993
Mr. SMITH of Iowa introduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To amend title II of the Social Security Act to provide
for the investment of the Trust Fund in the same invest-
ments permitted by pension funds guaranteed by the
Employee Retirement Income Security Act and to require
the Trustees to meet the same prudent person standards
required under that Act.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Social Security Trust
Fund Amendments of 1993’’.
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SEC. 2. Title II, section 201 of the Social Security
Act (42 U.S.C. 401) is amended by deleting subsections
(c) and (d) and inserting in lieu thereof the following:
‘‘(c) BOARD OF TRUSTEES: DUTIES; REPORTS TO
CONGRESS.—With respect to the Federal Old-Age and
Survivors Insurance Trust Fund and the Federal Disabil-
ity Insurance Trust Fund (hereinafter in this subchapter
called the ‘‘Trust Funds’’) there is hereby created a body
to be known as the Board of Trustees of the Trust Funds
(hereinafter in this subchapter called the ‘‘Board of Trust-
ees’’) which Board of Trustees shall be composed of the
Secretary of the Treasury, the Secretary of Labor, and
the Secretary of Health and Human Services, all ex
officio, and of eight members of the public (not more than
four of whom may be from the same political party), who
shall be nominated by the President for a term of four
years and subject to confirmation by the Senate. The
terms of two of the members of the public shall expire
each year. A member of the Board of Trustees serving
as a member of the public and nominated and confirmed
to fill a vacancy occurring during a term shall be nomi-
nated and confirmed only for the remainder of such term.
An individual nominated and confirmed as a member of
the public may serve in such position after the expiration
of such member’s term until the earlier of the time at
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which the member’s successor takes office or the time at
which a report of the Board is first issued under para-
graph (2) after the expiration of the member’s term. The
Secretary of the Treasury shall be the Managing Trustee
of the Board of Trustees (hereinafter in this subchapter
called the ‘‘Managing Trustee’’). The Commissioner of So-
cial Security shall serve as Secretary of the Board of
Trustees. The Board of Trustees shall meet not less fre-
quently than ten times each calendar year. It shall be the
duty of the Board of Trustees to—
‘‘(1) hold the Trust Funds;
‘‘(2) report to the Congress not later than the
first day of April of each year on the operation and
status of the Trust Funds during the preceding fis-
cal year and on their expected operation and status
during the next ensuing five fiscal years;
‘‘(3) report immediately to the Congress when-
ever the Board of Trustees is of the opinion that the
amount of either of the Trust Funds is unduly
small;
‘‘(4) recommend improvements in administra-
tive procedures and policies designed to effectuate
the proper coordination of the old-age and survivors
insurance and Federal-State unemployment com-
pensation program;
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‘‘(5) review the general policies followed in
managing the Trust Funds, and recommend changes
in such policies, including necessary changes in the
provisions of the law which govern the way in which
the Trust Funds are to be managed; and
‘‘(6) approve the investment of funds and dis-
charge their duties in a manner which is solely in
the interest of the beneficiaries of the funds; and
‘‘(A) for the exclusive purpose of—
‘‘(i) providing benefits for the bene-
ficiaries; and
‘‘(ii) defraying reasonable expenses of
administering the fund;
‘‘(B) with the care, skill, prudence, and
diligence under the circumstances then prevail-
ing that a prudent person acting in a like ca-
pacity and familiar with such matters would use
in the conduct of an enterprise of a like char-
acter and with like aims;
‘‘(C) by diversifying the investments of the
plan so as to minimize the risk of large losses,
unless under the circumstances it is clearly pru-
dent not to do so; and
‘‘(D) in accordance with the provisions of
subsection (d) below.
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‘‘(d) INVESTMENTS.—It shall be the duty of the Man-
aging Trustee to invest such portion of the Trust Funds
as is not, in his judgment, required to meet current with-
drawals. Not more than one-fourth of such investments
(based upon the cost at the time of investment) may be
held in interest-bearing obligations of the United States.
For such purpose such obligations may be acquired (1)
on original issue at the issue price, or (2) by purchase
of outstanding obligations at the market price. The pur-
poses for which obligations of the United States may be
issued under chapter 31 of title 31 are hereby extended
to authorize the issuance at par of public-debt obligations
for purchase by the Trust Funds. Such obligations issued
for purchase by the Trust Funds shall have maturities
fixed with due regard for the needs of the Trust Funds
and shall bear interest at a rate equal to the average mar-
ket yield (computed by the Managing Trustee on the basis
of market quotations as of the end of the calendar month
next preceding the date of such issue) on all marketable
interest-bearing obligations of the United States then
forming a part of the public debt which are not due or
callable until after the expiration of four years from the
end of such calendar month; except that where such aver-
age market yield is not a multiple of one-eighth of 1 per
centum, the rate of interest of such obligations shall be
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the multiple of one-eighth of 1 per centum nearest such
market yield. The Managing Trustee, with the approval
of a majority of the Board of Trustees, shall invest the
funds not required to meet current withdrawals and not
invested in interest-bearing obligations of the United
States described above, in other interest-bearing obliga-
tions of the United States or obligations guaranteed as
to both principal and interest by the United States, on
original issue or at the market price, and in bonds, deben-
tures, and securities in accordance with the provisions of
section (c).’’.
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