Position Paper - Jim Bunning

Social Security for the 21^st Century Act

Gives taxpayers a voluntary choice to establish a Retirement Security Account to help bolster savings. If a taxpayer chooses not to participate in the program, they could continue in Social Security just like before. It would be voluntary, not mandatory.

Permits tax-free withdrawals from Retirement Security Accounts after an investor retires.

Allows taxpayers to set aside 2.5% of their total employee FICA tax contribution and to invest this money in a individual Retirement Security Account. This amount would increase by 2.5% each year for up to 20 years when it would equal ½ of their total FICA contribution. Future investments in Retirement Security Accounts would be capped at that level until retirement or the employee’s decision to discontinue investing. Investors could begin investing money and then stop, but they would not be able to then begin investing again.

A taxpayer/investor would be able to manage this money just like government workers do today under the Federal Employees Thrift Savings Plan (TSP).

Offers at least five distinct funds representing different types of investment (e.g., common stock index fund, fixed income, government securities, international stock index fund, small cap fund)
The investor, not the government, would decide how their money is invested.
Annual open season to give investors the ability to change their investment to maximize their return.
Ensure no conflict of interest or undue coercion of the stock market by preventing the government from voting shares of stock, and following the scrupulous rules to which TSP adheres.

In exchange for being able to invest in a Retirement Security Account, an investor would have to agree to a 50% cut in Social Security benefits.

Protects the most vulnerable seniors by not changing the retirement age, cutting benefits or COLAs.

Includes language from legislation that passed the House in the 105^th Congress (H.R. 4578) that would set up a special Protect Social Security Account at the Treasury to safeguard budget surpluses and make it easier to devote them to Social Security.

TSP Rates of Return over the past ten years. This includes years in the early 1990s when the markets were not doing well. These compare very favorably to the 2-3% rate of return taxpayers now get on their FICA contributions.