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106th CONGRESS
1st Session
S. 1383
To amend title II of the Social Security Act to provide for individual
savings accounts funded by employee and employer social security
payroll deductions, to extend the solvency of the old-age, survivors,
and disability insurance program, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 16, 1999
Mr. Gregg (for himself, Mr. Kerrey, Mr. Breaux, Mr. Grassley, Mr.
Thompson, Mr. Robb, and Mr. Thomas) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend title II of the Social Security Act to provide for individual
savings accounts funded by employee and employer social security
payroll deductions, to extend the solvency of the old-age, survivors,
and disability insurance program, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Bipartisan Social
Security Reform Act of 1999''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--INDIVIDUAL SAVINGS ACCOUNTS
Sec. 101. Individual savings accounts.
Sec. 102. Social security KidSave Accounts.
Sec. 103. Adjustments to primary insurance amounts under part A of
title II of the Social Security Act.
TITLE II--SOCIAL SECURITY SYSTEM ADJUSTMENTS
Sec. 201. Adjustments to bend points in determining primary insurance
amounts.
Sec. 202. Adjustment of widows' and widowers' insurance benefits.
Sec. 203. Elimination of earnings test for individuals who have
attained early retirement age.
Sec. 204. Gradual increase in number of benefit computation years; use
of all years in computation.
Sec. 205. Maintenance of benefit and contribution base.
Sec. 206. Reduction in the amount of certain transfers to Medicare
Trust Fund.
Sec. 207. Actuarial adjustment for retirement.
Sec. 208. Improvements in process for cost-of-living adjustments.
Sec. 209. Modification of increase in normal retirement age.
Sec. 210. Modification of PIA factors to reflect changes in life
expectancy.
Sec. 211. Mechanism for remedying unforeseen deterioration in social
security solvency.
TITLE I--INDIVIDUAL SAVINGS ACCOUNTS
SEC. 101. INDIVIDUAL SAVINGS ACCOUNTS.
(a) Establishment and Maintenance of Individual Savings Accounts.--
Title II of the Social Security Act (42 U.S.C. 401 et seq.) is
amended--
(1) by inserting before section 201 the following:
``Part A--Insurance Benefits'';
and
(2) by adding at the end the following:
``Part B--Individual Savings Accounts
``individual savings accounts
``Sec. 251. (a) Establishment.--
``(1) In general.--
``(A) Establishment in absence of kidsave
account.--Except as provided in subparagraph (B), the
Commissioner of Social Security, within 30 days of the
receipt of the first contribution received pursuant to
subsection (b) with respect to an eligible individual,
shall establish in the name of such individual an
individual savings account. The individual savings
account shall be identified to the account holder by
means of the account holder's Social Security account
number.
``(B) Use of kidsave account.--If a KidSave Account
has been established in the name of an eligible
individual under section 262(a) before the date of the
first contribution received by the Commissioner
pursuant to subsection (b) with respect to such
individual, the Commissioner shall redesignate the
KidSave Account as an individual savings account for
such individual.
``(2) Definition of eligible individual.--In this part, the
term `eligible individual' means any individual born after
December 31, 1937.
``(b) Contributions.--
``(1) Amounts transferred from the trust fund.--The
Secretary of the Treasury shall transfer from the Federal Old-
Age and Survivors Insurance Trust Fund, for crediting by the
Commissioner of Social Security to an individual savings
account of an eligible individual, an amount equal to the sum
of any amount received by such Secretary on behalf of such
individual under section 3101(a)(2) or 1401(a)(2) of the
Internal Revenue Code of 1986.
``(2) Other contributions.--For provisions relating to
additional contributions credited to individual savings
accounts, see sections 531(c)(2) and 6402(l) of the Internal
Revenue Code of 1986.
``(c) Designation of Investment Type of Individual Savings
Account.--
``(1) Designation.--Each eligible individual who is
employed or self-employed shall designate the investment type
of individual savings account to which the contributions
described in subsection (b) on behalf of such individual are to
be credited.
``(2) Form of designation.--The designation described in
paragraph (1) shall be made in such manner and at such
intervals as the Commissioner of Social Security may prescribe
in order to ensure ease of administration and reductions in
burdens on employers.
``(3) Special rule for 2000.--Not later than January 1,
2000, any eligible individual that is employed or self-employed
as of such date shall execute the designation required under
paragraph (1).
``(4) Designation in absence of designation by eligible
individual.--In any case in which no designation of the
individual savings account is made, the Commissioner of Social
Security shall make the designation of the individual savings
account in accordance with regulations that take into account
the competing objectives of maximizing returns on investments
and minimizing the risk involved with such investments.
``(d) Treatment of Incompetent Individuals.--Any designation under
subsection (c)(1) to be made by an individual mentally incompetent or
under other legal disability may be made by the person who is
constituted guardian or other fiduciary by the law of the State of
residence of the individual or is otherwise legally vested with the
care of the individual or his estate. Payment under this part due an
individual mentally incompetent or under other legal disability may be
made to the person who is constituted guardian or other fiduciary by
the law of the State of residence of the claimant or is otherwise
legally vested with the care of the claimant or his estate. In any case
in which a guardian or other fiduciary of the individual under legal
disability has not been appointed under the law of the State of
residence of the individual, if any other person, in the judgment of
the Commissioner, is responsible for the care of such individual, any
designation under subsection (c)(1) which may otherwise be made by such
individual may be made by such person, any payment under this part
which is otherwise payable to such individual may be made to such
person, and the payment of an annuity payment under this part to such
person bars recovery by any other person.
``definition of individual savings account; treatment of accounts
``Sec. 252. (a) Individual Savings Account.--In this part, the term
`individual savings account' means any individual savings account in
the Individual Savings Fund (established under section 254) which is
administered by the Individual Savings Fund Board.
``(b) Treatment of Account.--Except as otherwise provided in this
part and in section 531 of the Internal Revenue Code of 1986, any
individual savings account described in subsection (a) shall be treated
in the same manner as an individual account in the Thrift Savings Fund
under subchapter III of chapter 84 of title 5, United States Code.
``individual savings account distributions
``Sec. 253. (a) Date of Initial Distribution.--Except as provided
in subsection (c), distributions may only be made from an individual
savings account of an eligible individual on and after the earliest
of--
``(1) the date the eligible individual attains normal
retirement age, as determined under section 216 (or early
retirement age (as so determined) if elected by such
individual), or
``(2) the date on which funds in the eligible individual's
individual savings account are sufficient to provide a monthly
payment over the life expectancy of the eligible individual
(determined under reasonable actuarial assumptions) which, when
added to the eligible individual's monthly benefit under part A
(if any), is at least equal to an amount equal to \1/12\ of the
poverty line (as defined in section 673(2) of the Community
Services Block Grant Act (42 U.S.C. 9902(2) and determined on
such date for a family of the size involved) and adjusted
annually thereafter by the adjustment determined under section
215(i).
``(b) Forms of Distribution.--
``(1) Required monthly payments.--Except as provided in
paragraph (2), beginning with the date determined under
subsection (a), the balance in an individual savings account
available to provide monthly payments not in excess of the
amount described in subsection (a)(2) shall be paid, as elected
by the account holder (in such form and manner as shall be
prescribed in regulations of the Individual Savings Fund
Board), by means of the purchase of annuities or equal monthly
payments over the life expectancy of the eligible individual
(determined under reasonable actuarial assumptions) in
accordance with requirements (which shall be provided in
regulations of the Board) similar to the requirements
applicable to payments of benefits under subchapter III of
chapter 84 of title 5, United States Code, and providing for
indexing for inflation.
``(2) Payment of excess funds.--To the extent funds remain
in an eligible individual's individual savings account after
the application of paragraph (1), such funds shall be payable
to the eligible individual in such manner and in such amounts
as determined by the eligible individual, subject to the
provisions of subchapter III of chapter 84 of title 5, United
States Code.
``(c) Distribution in the Event of Death Before the Date of Initial
Distribution.--If the eligible individual dies before the date
determined under subsection (a), the balance in such individual's
individual savings account shall be distributed in a lump sum, under
rules established by the Individual Savings Fund Board, to the
individual's heirs.
``individual savings fund
``Sec. 254. (a) Establishment.--There is established and maintained
in the Treasury of the United States an Individual Savings Fund in the
same manner as the Thrift Savings Fund under sections 8437, 8438, and
8439 (but not section 8440) of title 5, United States Code.
``(b) Individual Savings Fund Board.--
``(1) In general.--There is established and operated in the
Social Security Administration an Individual Savings Fund Board
in the same manner as the Federal Retirement Thrift Investment
Board under subchapter VII of chapter 84 of title 5, United
States Code.
``(2) Specific investment and reporting duties.--
``(A) In general.--The Individual Savings Fund
Board shall manage and report on the activities of the
Individual Savings Fund and the individual savings
accounts of such Fund in the same manner as the Federal
Retirement Thrift Investment Board manages and reports
on the Thrift Savings Fund and the individual accounts
of such Fund under subchapter VII of chapter 84 of
title 5, United States Code.
``(B) Study and report on increased investment
options.--
``(i) Study.--The Individual Savings Fund
Board shall conduct a study regarding ways to
increase an eligible individual's investment
options with respect to such individual's
individual savings account and with respect to
rollovers or distributions from such account.
``(ii) Report.--Not later than 2 years
after the date of enactment of the Bipartisan
Social Security Reform Act of 1999, the
Individual Savings Fund Board shall submit a
report to the President and Congress that
contains a detailed statement of the results of
the study conducted pursuant to clause (i),
together with the Board's recommendations for
such legislative actions as the Board considers
appropriate.
``budgetary treatment of individual savings fund and accounts
``Sec. 255. The receipts and disbursements of the Individual
Savings Fund and any accounts within such fund shall not be included in
the totals of the budget of the United States Government as submitted
by the President or of the congressional budget and shall be exempt
from any general budget limitation imposed by statute on expenditures
and net lending (budget outlays) of the United States Government.''.
(b) Modification of FICA Rates.--
(1) Employees.--Section 3101(a) of the Internal Revenue
Code of 1986 (relating to tax on employees) is amended to read
as follows:
``(a) Old-Age, Survivors, and Disability Insurance.--
``(1) In general.--
``(A) Individuals covered under part a of title ii
of the social security act.--In addition to other
taxes, there is hereby imposed on the income of every
individual who is not a part B eligible individual a
tax equal to 6.2 percent of the wages (as defined in
section 3121(a)) received by him with respect to
employment (as defined in section 3121(b)).
``(B) Individuals covered under part b of title ii
of the social security act.--In addition to other
taxes, there is hereby imposed on the income of every
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