| Voluntary |
Yes, for every worker age 25-54 beginning of 2004.
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| Account Size/Source |
Carve out: 4% of taxable earnings up to $1,300 starting by 2006.
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| Additional Contribution |
Voluntary contribution up to $5,000. Workers earning less than $27,500 would receive a $100 match for making $1 additional contribution, and 50% of any additional contribution up to $500 total.
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| Benefits from Current System |
Traditional benefits would be offset at a 2.7% real interest rate.
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| Investment Structure |
Similar to TSP model with a default portfolio of 60% stocks and 40% government bonds. Once the account balance reaches $10,000, workers could choose to invest in specific private market, centrally managed, SEC approved retirement funds.
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| Inheritability |
Account balance goes to worker's estate.
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| Withdrawal Options |
Withdrawals prior to benefit entitlement would be permitted only if one could purchase an annuity equal to 100% of poverty level. At retirement, remaining balance after purchasing an annuity equal to 100% of poverty level, may be taken out as a lump sum.
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| Minimum Benefit |
A worker with 35 years of earnings would receive a minimum of 120% of poverty level.
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| Changes to Benefit Formula |
~Starting in 2009, reduce the PIA benefit formula factos by the difference between CPI and average wage growth. ~Beginning in 2009, the formula for calculating the accrual of benefits would use earnings indexed to the increase in prices (measured by the CPI) rather than national wage growth. In other words, traditional benefits would be price indexed. Individuals who did not choose the accounts options can continue paying the same payroll tax rate and receive price indexed benefits, or realize an initial 2 percentage points increase in the payroll tax rate and receive benefits according to the current law benefit schedule.
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| Retirement Age |
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| Other Benefit Changes |
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| Disability/Survivors |
No changes.
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| Transition Funding Mechanism |
~Redirecting the portion of taxes on Social Security benefits currently used to fund Medicare back to Social Security. ~There would be a commission to recommend cuts in corporate welfare programs.~Starting 2006, general fund transfers equal to 1.25 percent of taxable payroll.
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