I 112th CONGRESS 1st Session H. R. 2889 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.

Short title and table of contents

(a)

Short title

This Act may be cited as the Save Social Security Act. (b)

Table of contents

The table of contents is 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. 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.

2.

Establishment of Personal Social Security Savings Program

Title II of the Social Security Act is amended— (1)by inserting before section 201 the following: A

Insurance benefits

; and(2)by adding at the end the following new part: B

Personal Social Security Savings Program

251.

Definitions

For purposes of this part— (1)

Qualifying individual

The term qualifying individual means any individual— (A)who is born on or after January 1, 1961, and (B)(i)who receives wages in any calendar year after December 31, 2010, on which there is imposed a tax under section 3101(a) of the Internal Revenue Code of 1986, or (ii)who derives self-employment income for a taxable year beginning after December 31, 2010, on which there is imposed a tax under section 1401(a) of such Code. (2)

Participant

The term participant means a qualifying individual who has elected under section 253(a) to participate in the program established under this part. (3)

Board

The term Board means the Personal Social Security Savings Board established under section 259. (4)

Executive Director

The term Executive Director means the Executive Director appointed under section 260. (5)

Personal social security savings account

The term personal social security savings account means an account established under section 253(b). (6)

Personal social security savings annuity

The term personal social security savings annuity means an annuity offered by the Annuity Issuance Authority under section 257. (7)

Savings Fund

The term Savings Fund means the Personal Social Security Savings Fund established under section 252. (8)

Tier I Investment Fund

The term Tier I Investment Fund means the fund created under section 255. (9)

Tier II Investment Option

The term Tier II Investment Option means an investment option which is— (A)offered by an eligible entity certified by the Board under section 256(b); and (B)approved by the Board under section 256(d).

252.

Personal Social Security Savings Fund

(a)

Establishment of Savings Fund

(1)

Establishment

There is established in the Treasury of the United States a trust fund to be known as the Personal Social Security Savings Fund. (2)

Amounts in Fund

The Savings Fund shall consist of— (A)all amounts contributed to the Savings Fund under section 254, increased by the total net earnings from investments of sums in the Savings Fund attributable to such contributed amounts, and reduced by the total net losses from investments of such sums, and (B)the reserves held in the Annuity Reserves Account established under section 257(b)(3), increased by the total net earnings from investments of such reserves, and reduced by the total net losses from investments of such reserves. (3)

Trustees

The Board shall serve as trustees of the Savings Fund. (4)

Budget authority; appropriation

This part constitutes budget authority in advance of appropriations Acts and represents the obligation of the Board to provide for the payment of amounts provided under this part. The amounts held in the Savings Fund are appropriated and shall remain available without fiscal year limitation. (b)

Availability

The sums in the Savings Fund are appropriated and shall remain available without fiscal year limitation— (1)to invest funds in the Tier I Investment Fund of the Savings Fund under section 255; (2)to transfer funds in the Tier I Investment Fund into Tier II Investment Options under section 256; (3)to make distributions in accordance with section 257; and (4)to pay the administrative expenses of the Board in accordance with subsection (d). (c)

Limitations on use of funds

(1)

In general

Sums in the Savings Fund credited to a participant’s personal social security savings account under section 255(a)(1)(3) may not be used for, or diverted to, purposes other than for the exclusive benefit of the participant or the participant’s beneficiaries under this part. (2)

Assignments

Sums in the Savings Fund may not be assigned or alienated and are not subject to execution, levy, attachment, garnishment, or other legal process. (d)

Payment of administrative expenses

Administrative expenses incurred to carry out this part shall be paid out of net earnings in the Savings Fund in conjunction with the allocation of investment earnings and losses under section 253(d). (e)

Limitation

The sums in the Savings Fund shall not be appropriated for any purpose other than the purposes specified in this part and may not be used for any other purpose.

253.

Participation in program and establishment of personal social security savings accounts

(a)

Participation

A qualifying individual may, at any time on or after January 1, 2012, elect, in such form and manner as shall be prescribed by the Board, to be a participant in the program established under this part. The Board shall certify to the Executive Director that the qualifying individual is a participant in the program. An election under this subsection shall be irrevocable. (b)

Establishment of publicly administered system of personal security savings accounts

Upon receipt of the certification that a qualifying individual is a participant in the program established under this part, the Executive Director shall establish a personal social security savings account for such participant. Such account shall be the means by which amounts contributed to the Savings Fund under section 254 and held in the Tier I Investment Fund of the Savings Fund under section 255 or under Tier II Investment Options under section 256 are credited to the participant, under procedures which shall be established by the Board by regulation. Each account of a participant shall be identified to the participant by means of the participant’s social security account number. (c)

Account balance

The balance in a participant’s account at any time is the sum of— (1)the excess of— (A)all deposits in the Tier I Investment Fund of the Savings Fund credited to such participant’s personal social security savings account, subject to such increases and reductions as may result from allocations made to and reductions made in the account pursuant to subsection (d); over (B)amounts paid out of the Tier I Investment Fund in connection with amounts credited to such participant’s personal social security savings account; plus (2)the excess of— (A)the deposits in the Tier II Investment Options credited to such participant’s personal social security savings account, subject to such increases and reductions as may result from amounts credited to, and reductions made in, the account pursuant to subsection (d)(2); over (B)amounts paid out of the Tier II Investment Options of such participant. The calculation made under paragraph (2) shall be made separately for each Tier II Investment Option of the participant.(d)

Allocation of earnings and losses

Pursuant to regulations which shall be prescribed by the Board, the Executive Director shall allocate to each personal social security savings account an amount equal to the net earnings and net losses from each investment of sums— (1)in the Tier I Investment Fund which are attributable to sums credited to such account reduced by an appropriate share of the administrative expenses paid out of the net earnings, as determined by the Executive Director; and (2)in the Tier II Investment Options which are attributable to sums credited to such account reduced by the administrative expenses paid out of the net earnings.

254.

Contributions to the Savings Fund

(a)

Form and manner of contributions

(1)

Determination and certification of contribution amounts

In the case of each qualifying individual who becomes a participant pursuant to an election made under section 253, the Executive Director shall— (A)prior to the first calendar quarter beginning after the effective date of the election, determine the contribution amount with respect to the participant under subsection (b) for the calendar year in which such quarter occurs and certify such amount to the Secretary of the Treasury, and (B)prior to each calendar year commencing after the effective date of the election, determine the contribution amount with respect to the participant under subsection (b) for such calendar year and certify such amount to the Secretary of the Treasury. (2)

Transfer of contribution amounts to Savings Fund

Upon receipt of a certification of a contribution amount for any calendar year under paragraph (1), the Secretary of the Treasury shall, before the end of each calendar quarter beginning during such calendar year and after the date of such certification, transfer 25 percent of such amount from amounts in the general fund of the Treasury (subject to section 6 of the Personal Social Security Savings Guarantee and Prosperity Act of 2011). (b)

Amount of contribution

(1)

In general

The contribution amount for any calendar year under subsection (a) with respect to a participant shall be equal to the sum of— (A)the product derived by multiplying— (i)the sum of the total wages paid to, and self-employment income derived by, the participant which are creditable by the Commissioner of Social Security to the preceding calendar year, to the extent such total wages and self-employment income do not exceed the base amount for such preceding calendar year, by (ii)5 percent, and (B)the product derived by multiplying— (i)the sum of the total wages paid to, and self-employment income derived by, the participant which are creditable by the Commissioner to such preceding calendar year, to the extent such total wages and self-employment income exceed the base amount for such preceding calendar year but do not exceed the contribution and benefit base (determined under section 230) for such preceding calendar year, by (ii)2.5 percent. (2)

Base amount

For purposes of paragraph (1)— (A)

Initial base amount

The base amount for calendar years 2011 and 2012 is $10,000. (B)

Adjustments to base amount

The base amount for any calendar year after 2012 is the product derived by multiplying $10,000 by a fraction— (i)the numerator of which is the national average wage index (as defined in section 209(k)) for the first of the 2 preceding calendar years, and (ii)the denominator of which is the national average wage index (as so defined) for 2010, except that any such product that is not a multiple of $10.00 shall be rounded to the next lower multiple of $10.00.(3)

Determination and treatment of excess contributions

The amount of contributions for a participant for a calendar year shall be determined on the basis of estimates, made by the Commissioner of Social Security and certified to the Executive Director, of the wages paid to, and self-employment income derived by, the participant for the preceding calendar year. Proper adjustments shall be made in the maximum amount for subsequent calendar years to the extent prior estimates were in excess of or were less than actual amounts, except that the Executive Director may, as determined appropriate by the Executive Director, provide for refunds to the Treasury of amounts contributed in excess of the maximum amount in lieu of such adjustments. Estimates and adjustments made pursuant to this paragraph shall be communicated by the Executive Director to the Secretary of the Treasury in such timely manner as to allow, to the greatest extent practicable, for contributions to the Savings Fund which do not exceed the proper amount.

255.

Tier I Investment Fund

(a)

Establishment of Tier I Investment Fund

(1)

In general

The Savings Fund shall include a separate fund to be known as the Tier I Investment Fund. (2)

Amounts in fund

The Tier I Investment Fund consists of all amounts derived from contributions made to the Fund under section 254 and remaining after investment of such amounts under subsection (b), including additional amounts derived as income from such investments. (3)

Separate crediting to personal social security savings accounts

(A)

In general

Subject to this subsection, the Board shall provide for prompt, separate crediting of the amounts deposited in the Tier I Investment Fund to the personal social security savings account of each participant to the extent such amount consists of contributions made to the Savings Fund under section 254 with respect to such participant, together with any increases or decreases therein so as to reflect the net returns and losses from investment thereof while held in the Fund. (B)

Treatment of married participants

If the participant is married as of the end of the calendar year in which the amounts to be credited were deposited in the Tier I Investment Fund and the spouse is also a participant, the personal social security savings account of the participant and the personal social security savings account of his or her spouse shall each be credited with 50 percent of such amounts. (4)

Use of funds

The amounts held in the Fund are appropriated and shall remain available without fiscal year limitation— (A)to be held for investment under subsection (b), (B)to pay the administrative expenses related to the Fund, and (C)to make transfers to Tier II Investment Options under section 256 or to make payments under section 257. (b)

Investment guidelines

(1)

In general

For purposes of investment of amounts credited to each personal social security savings account, the Board shall provide by regulation for 3 investment options. Such options shall consist of the 90/10 investment option, the 70/30 investment option, the 50/50 investment option, and the lifecycle investment option. (2)

Alternative investment options

(A)

The 90/10 investment option

Under the 90/10 investment option, amounts credited to the participant’s personal social security savings account are held in the Tier I Investment Fund so as to ensure, to the maximum extent practicable, that, of the total balance credited to the account and available for investment (after allowing for administrative expenses)— (i)90 percent is invested in common stock as provided in paragraph (4), and (ii)10 percent is invested in fixed income securities as provided in paragraph (5). For such purpose, certified account managers shall offer the participant a choice of one or more portfolios of each such type of investment.(B)

The 70/30 investment option

Under the 70/30 investment option, amounts credited to the participant’s personal social security savings account are held in the Tier I Investment Fund so as to ensure, to the maximum extent practicable, that, of the total balance credited to the account and available for investment (after allowing for administrative expenses)— (i)70 percent is invested in common stock as provided in paragraph (4), and (ii)30 percent is invested in fixed income securities as provided in paragraph (5). For such purpose, certified account managers shall offer the participant a choice of one or more portfolios of each such type of investment.(C)

The 50/50 investment option

Under the 50/50 investment option, amounts credited to the participant’s personal social security savings account are held in the Tier I Investment Fund so as to ensure, to the maximum extent practicable, that, of the total balance credited to the account and available for investment (after allowing for administrative expenses)— (i)50 percent is invested in common stock as provided in paragraph (4), and (ii)50 percent is invested in fixed income securities as provided in paragraph (5). For such purpose, certified account managers shall offer the participant a choice of one or more portfolios of each such type of investment.(D)

Lifecycle investment option

(i)

In general

Under the lifecycle investment option, amounts credited to the participant’s personal social security savings account are held in the Tier I Investment Fund so as to ensure, to the maximum extent practicable, that the total balance credited to the account and available for investment (after allowing for administrative expenses) shall be invested over time, under regulations which shall be prescribed by the Board, in a mix of common stock and fixed income securities according to the each of the investment options described in subparagraphs (A), (B), and (C) so as to ensure, to the maximum extent practicable, that the percentage invested in fixed income securities by individuals in designated cohorts, ranging in age up to those of at least retirement age, will increase from 10 percent to 50 percent as the cohort approaches retirement age. (ii)

Default option

Except as provided in an election under paragraph (3), amounts credited to the participant’s personal social security savings account and held in the Tier I Investment Fund shall be invested as provided in clause (i). (3)

Elections among investment options

Pursuant to any individual’s election filed in accordance with regulations of the Board during annual open seasons specified in such regulations, the Executive Director shall, in accordance with such regulations, provide for disinvestment and reinvestment of amounts credited to the participant’s personal social security savings account and held in the Tier I Investment Fund under any of the investment options described in paragraph (2) so as to provide for investment of amounts credited to the account in any of the other such investment options specified in such election. (4)

Common stock index requirements

The Board shall establish by regulation standards which must be met by any portfolio of common stock selected for investment as provided in subparagraph (A)(i), (B)(i), (C)(i), or (D) of paragraph (2). Amounts invested in common stock under an investment option shall be held in a portfolio designed to replicate the performance of one or more of indices comprised of common stock the aggregate market value of which is, in each case, a reasonably broad representation of publicly held companies whose shares are traded on the equity markets. (5)

Fixed income securities requirements

The Board shall establish by regulation standards which must be met by fixed income securities selected for investment as provided in subparagraph (A)(ii), (B)(ii), (C)(ii), or (D) of paragraph (2). The amounts invested in fixed income securities shall be held in a portfolio which shall consist of a diverse range of high-grade corporate bonds, taking into full account the opposing considerations of risk and maximization of return. (c)

Annual description of Tier I investment options and disclosure of administrative costs

The Board shall provide annually to each participant— (1)a description of the investment options available with respect to amounts held in the Tier I Investment Fund and the procedures for selecting such options; and (2)a disclosure of the rate of administrative costs chargeable with respect to each investment option. Descriptions and disclosures required under this subsection shall be written in a manner calculated to be understood by the average participant.(d)

Treatment of amounts held in Tier I Investment Fund

Subject to this part, amounts deposited into, and held and accounted for in, the Tier I Investment Fund with respect to any participant shall be treated as property of such participant, held in trust for such participant in the Fund.

256.

Tier II Investment Options

(a)

Election of Tier II Investment Options

(1)

In general

A participant may elect to direct transfers from amounts in the Savings Fund credited to the personal social security savings account of such individual into 1 or more Tier II Investment Options in accordance with paragraph (2). (2)

Commencement of Tier II investment options upon attainment of election threshold

In any case in which, as of the end of any calendar year, the total balance in the Savings Fund credited to a participant’s personal social security savings account exceeds for the first time the election threshold, the Board shall, by regulation, provide for an opportunity for such participant to make, at any time thereafter, such individual’s first election of one or more of the Tier II Investment Options for investment of an amount in the Savings Fund credited to such account. Such election may be in lieu of or in addition to investment in the options available with respect to the Tier I Investment Fund of the Savings Fund. (3)

Allocation of funds

In the case of an election under paragraph (1), funds credited to the personal social security savings account of the participant and elected for transfer to one or more Tier II Investment Options shall be transferred to the Tier II Investment Options so elected for such calendar year, in percentages specified in the election by the participant for each Tier II Investment Option. (4)

Election threshold

(A)

In general

Subject to subparagraph (B), for purposes of this subsection the term election threshold means an amount equal to $25,000. (B)

Adjustments

The Board shall adjust annually (effective for annual reporting months occurring after December 2012) the dollar amount set forth in subparagraph (A) under procedures providing for adjustments in the same manner and to the same extent as adjustments are provided for under the procedures used to adjust benefit amounts under section 215(i)(2)(A), except that any amount so adjusted that is not a multiple of $1.00 shall be rounded to the nearest multiple of $1.00. (5)

Subsequent investment of amounts held in Tier II Investment Options

Any amounts held in one or more Tier II Investment Options may be— (A)transferred at any time to one or more other Tier II Investment Options offered by the same or different eligible entities, subject to applicable regulations of the Board and the terms governing the affected Tier II Investment Options, and (B)transferred, not more frequently than annually, to the Tier I Investment Fund, for deposit in the applicable investment account then selected by the participant under section 255. (b)

Certification of eligible entities

(1)

In general

The Board shall certify eligible entities to offer Tier II Investment Options under this part. (2)

Application

Any eligible entity that desires to be certified by the Board to offer a Tier II Investment Option shall submit an application to the Board at such time, in such manner, and containing such information as the Board may require. (3)

Requirements for approval

The Board shall not certify an eligible entity unless such eligible entity agrees to the following requirements: (A)

Recordkeeping

Each eligible entity shall, with respect to each Tier II Investment Option offered by such eligible entity to participants, comply with standards which shall be prescribed by the Board to maintain accurate crediting of the interest of each participant in the Option to that participant’s personal social security savings account. (B)

Treatment of amounts held in Fund

Amounts deposited into, and held and accounted for in, a Tier II Investment Option with respect to any participant shall be treated as property of such participant, held in trust for such participant. (C)

Trust requirements

Amounts held and accounted for with respect to a participant shall be held in a trust created or organized in the United States for the exclusive benefit of such participant or his or her beneficiaries. (D)

Exemption from third party claims

Each Tier II Investment Option shall be exempt from any and all third party claims against the eligible entity. (E)

Disclosure of administrative costs

Each eligible entity offering a Tier II Investment Option under this section shall provide to each participant an annual disclosure of the rate of administrative costs chargeable with respect to investment in such Option. Such disclosure shall be written in a manner calculated to be understood by the average participant. The Board shall provide for coordination of disclosures with respect to Tier II Investment Options under this subparagraph so as to assist participants in comparing alternative Options based on administrative costs. (F)

Annual description of Tier II Investment Options and disclosure of administrative costs

(i)

Disclosures to the Board

Each eligible entity offering a Tier II Investment Option under this section shall, in accordance with regulations of the Board, provide to the Board an annual disclosure of the Tier II Investment Options then currently available with respect to amounts credited to personal social security savings accounts under this part, the procedures in effect in the case of such eligible entity for selecting such Options, and the rate of administrative costs chargeable with respect to investment in each such Option. (ii)

Annual notices to participants

The Board shall provide annually to each participant a notice setting forth— (I)a description of the Tier II Investment Options available with respect to amounts credited to the participant’s personal social security savings account and the procedures for selecting such Options; and (II)a disclosure of the rate of administrative costs chargeable with respect to each such Option. Descriptions and disclosures required under this clause shall be written in a manner calculated to be understood by the average participant.(G)

Reporting to the Executive Director and the Board

Each eligible entity shall provide reports to the Executive Director and the Board at such time, in such manner, and containing such information as the Board may require. (4)

Eligible entity defined

For purposes of this section, the term eligible entity means any investment company (as defined in section 3 of the Investment Company Act of 1940) or other person that the Board determines appropriate to offer Tier II Investment Options under this part. (c)

Tier II Investment Options

(1)

In general

For purposes of investment of amounts credited to each personal social security savings account, the Board shall provide by regulation for investment in any of 3 alternative Tier II Investment Options which may be offered by any eligible entity. Any such option shall consist of a less conservative investment option, a moderate investment option, or a more conservative investment option. (2)

Alternative Tier II Investment Options

(A)

Less conservative investment options

Under a less conservative investment option, amounts credited to the participant’s personal social security savings account are held by the eligible entity so as to ensure, to the maximum extent practicable, that, of the total balance credited to the account and available for investment (after allowing for administrative expenses)— (i)at least 85 percent but not more than 95 percent is invested in common stock, and (ii)the remainder is invested in fixed income securities. For such purpose, the eligible entity shall offer the participant a choice of one or more portfolios of each such type of investment.(B)

Moderate investment options

Under a moderate investment option, amounts credited to the participant’s personal social security savings account are held by the eligible entity so as to ensure, to the maximum extent practicable, that, of the total balance credited to the account and available for investment (after allowing for administrative expenses)— (i)at least 65 percent but less than 75 percent is invested in common stock, and (ii)the remainder is invested in fixed income securities. For such purpose, the eligible entity shall offer the participant a choice of one or more portfolios of each such type of investment.(C)

More conservative investment options

Under a more conservative investment option, amounts credited to the participant’s personal social security savings account are held by the eligible entity so as to ensure, to the maximum extent practicable, that, of the total balance credited to the account and available for investment (after allowing for administrative expenses)— (i)at least 45 percent but less than 55 percent is invested in common stock, and (ii)the remainder is invested in fixed income securities. For such purpose, the eligible entity shall offer the participant a choice of one or more portfolios of each such type of investment.(3)

Elections among investment options

Pursuant to the participant’s election filed in accordance with regulations of the Board, and subject to the terms of the investment options described in paragraph (2) offered to the participant by the eligible entity and approved by the Board, the eligible entity offering any such investment option shall, in accordance with such regulations, provide for disinvestment and reinvestment of amounts credited to the participant’s personal social security savings account and held by the eligible entity in such investment option so as to provide for investment of amounts credited to the account in any of the other such investment options specified in such election. (d)

Approval of Tier II Investment Options

(1)

In general

No funds may be transferred into a Tier II Investment Option unless the Board has approved an application submitted under paragraph (2) with respect to the option. (2)

Application

With respect to each Tier II Investment Option that an eligible entity certified under subsection (b)(1) seeks to offer, such entity shall submit an application to the Board at such time, in such manner, and containing such information as the Board may require. (3)

Qualifications for approval

The Board may not approve an application submitted under paragraph (2) in connection with a Tier II Investment Option unless the following requirements are met: (A)

Option must be offered by certified eligible entity

The Tier II Investment Option is offered by an eligible entity certified under subsection (b). (B)

Option must meet quality factors

(i)

In general

The Tier II Investment Option meets qualifications which shall be prescribed by the Board relating to the quality factors described in clause (ii). (ii)

Quality factors

The quality factors described in this clause are— (I)the safety and soundness of the Tier II Investment Option's proposed investment policy; (II)the experience and record of performance of the proposed Option, if any; (III)the experience and record of performance of the entity issuing or offering such Option; and (IV)such other factors as the Board may determine appropriate. (e)

Considerations for certification and approval

In determining whether to certify an eligible entity under subsection (b) or to approve a Tier II Investment Option under subsection (d), the Board shall— (1)act in the best interests of the participants; (2)base its determination solely on considerations of balancing safety and soundness of the Tier II Investment Option with the maximization of returns of such option; (3)give equal consideration to options offered by variously-sized banks (as defined in section 581 of the Internal Revenue Code of 1986) or insured credit unions (within the meaning of section 101(7) of the Federal Credit Union Act, 12 U.S.C. 1752(7)) located in the United States; and (4)not base any determination related to the entity or option on political or other extraneous considerations. (f)

Sponsorship of Tier II Investment Options by Membership and Labor Organizations

(1)

In general

A membership or labor organization (as defined by the Board) may sponsor Tier II Investment Options under contracts with eligible entities certified under subsection (b) who shall administer the investment option if such investment option is approved by the Board under subsection (c). (2)

Limitation to membership

A membership or labor organization (as so defined) may limit to the members of such organization participation in a Tier II Investment Option sponsored by such organization. (g)

Distributions in case of death

Upon the death of a participant, the amount of any assets held under a Tier II Investment Option credited to the personal social security savings account of such individual shall be distributed in accordance with section 257(e).

257.

Personal social security savings annuity and other distributions

(a)

Date of initial distribution

Except as provided in subsection (e), distributions may be made to a participant from amounts credited to the personal social security savings account of such individual only on or after the date the participant attains retirement age (as defined in section 216(l)(1)) or, if elected by the participant, the early retirement age (as defined in section 216(l)(2)) applicable for old-age insurance benefits. (b)

Personal social security savings annuities

(1)

Notice of available annuities

Not later than the date determined under subsection (a), the Board shall notify each participant of— (A)the most recent listing of personal social security savings annuities offered by the Annuity Issuance Authority under paragraph (2); and (B)the entitlement of the participant to purchase such an annuity. (2)

Annuity Issuance Authority

There is established in the office of the Board an agency which shall be known as the Annuity Issuance Authority. The Authority shall provide, in accordance with regulations of the Board, for the issuance of personal social security savings annuities for purchase from the Authority under this section and to otherwise administer the issuance of such annuities in accordance with such regulations. (3)

Annuity Reserves Account

There is established in the Savings Fund an Annuity Reserves Account. The Account shall consist of all amounts received by the Authority from the purchase of personal social security savings annuities under this section (plus such amounts as may be transferred to the Account under paragraph (5)(B)), increased by the total net earnings from investments of such reserves under subparagraph (A) of paragraph (5) and reduced by the total net losses from investments of such reserves under such subparagraph. (4)

Purchase of annuities

(A)

Selection of annuity

On a date elected by the participant, but no earlier than the date determined under subsection (a), a participant may purchase a personal social security savings annuity selected from among the annuities offered by the Authority under paragraph (2). (B)

Transfer of assets

Upon the selection of an annuity by a participant under subparagraph (A), the Board shall provide for the transfer of assets, credited to the personal social security savings account of the participant and held in the Tier I Investment Fund or under 1 or more Tier II Investment Options (or any combination thereof), in a total amount sufficient to purchase the annuity selected by the participant from annuities offered by the Authority. (C)

Minimum annuity payment amount

(i)

In general

Subject to subparagraph (D), if, at the time a personal social security savings annuity is purchased under subparagraph (A), the assets credited to the personal social security savings account of the participant are sufficient to purchase a personal social security savings annuity offered by the Authority under paragraph (2) with a monthly annuity payment that is at least equal to the minimum annuity payment amount, the amount of the monthly annuity payment provided by such annuity may not be less than the minimum annuity payment amount. (ii)

Construction

Nothing in this subparagraph shall be construed to prohibit a participant from using personal social security savings account assets to purchase a personal social security savings annuity offered by the Authority under paragraph (2) which provides for a monthly payment in excess of the minimum amount required under clause (i). (iii)

Minimum annuity payment amount defined

For purposes of this part, the term minimum annuity payment amount means, as of any date, an amount equal to one-half of the old-age insurance benefit under section 202(a) of a participant under part B and any other monthly insurance benefit under such section based on the participant’s wages and self-employment income (as determined before applying any reduction or deduction otherwise applicable under this title and without regard to subsection (z)). (iv)

Assumptions

For purposes of making actuarial determinations relating to the amounts of annuities offered by the Authority under this section and the amounts necessary for the purchase of such annuities, the Authority shall project returns from the investment, in accordance with paragraph (5)(A), of the reserves held in the Annuities Reserves Account. The projection by the Authority of such returns shall be made under assumptions of long-term average returns of equities and fixed income instruments which shall be issued annually by the Board of Trustees of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund, based on analysis of historical market returns. (D)

Purchase of annuities in the event of insufficient assets

If, as of the date determined under subsection (a), the assets credited to a participant’s personal social security savings account are insufficient to purchase a personal social security savings annuity that provides for a monthly payment that is at least equal to the minimum annuity payment amount (as defined in paragraph (4)(C)(iii)), the participant may purchase a personal social security savings annuity with a monthly payment equal to the maximum amount that the participant's personal social security savings account can fund, as determined in accordance with regulations which shall be prescribed by the Authority, and that otherwise meets the requirements of this subsection (including the cost-of-living protection requirement of subsection (c)(1)(C)). (5)

Investment of reserves for payment of annuities

For purposes of investment of reserves held in the Annuity Reserves Account, the Authority shall contract with appropriate investment managers, recordkeepers, and custodians selected by the Authority for investment of such reserves. Such reserves shall be invested under regulations which shall be prescribed by the Authority so as to ensure, to the maximum extent practicable, that, of the total balance of the reserves (after payment of administrative expenses to such managers, recordkeepers, and custodians)— (A)65 percent is invested in equities in the same manner and under the same standards as are provided in section 255(b)(4), and (B)35 percent is invested in fixed income instruments in the same manner and under the same standards as are provided in section 255(b)(5). (c)

Personal social security savings annuity

(1)

In general

For purposes of this part, the term personal social security savings annuity means an annuity that meets the following requirements: (A)The annuity starting date (as defined in section 72(c)(4) of the Internal Revenue Code of 1986) commences on the first day of the month beginning after the date of the purchase of the annuity. (B)The terms of the annuity provide— (i)for a monthly payment to the participant during the life of the participant equal to at least the minimum annuity payment amount (as defined in subsection (b)(4)(C)(iii)), or (ii)in the case of an annuity purchased under subparagraph (D) of subsection (b)(4), the maximum monthly payment determined under regulations prescribed under such subparagraph. (C)The terms of the annuity include procedures providing for adjustments in the amount of the monthly payments in the same manner and to the same extent as adjustments are provided for under the procedures used to adjust benefit amounts under section 215(i)(2)(A). Nothing in this subparagraph shall be construed to preclude the terms governing such an annuity from providing for adjustments in the amount of monthly payments resulting in a payment for any month greater than the payment for that month that would result from adjustments required under the preceding sentence. (D)The terms of the annuity include such other terms and conditions as the Board requires for the protection of the annuitant. (2)

Exemption from third party claims

Each personal social security savings annuity shall be exempt from any and all third party claims against the issuer. (d)

Right To cash out personal social security savings account assets

To the extent assets credited to a participant's personal social security savings account are not used to purchase an annuity under subsection (b), the assets not so used shall be payable to the participant at such time (in accordance with subsection (a)), in such manner, and in such amounts as the participant may specify. (e)

Distributions in case of death

If the participant dies before all amounts which are held in the Tier I Investment Fund of the Savings Fund or held under a Tier II Investment Option and which are credited to the personal social security savings account of the individual are otherwise distributed in accordance with this section, such amounts shall be distributed, under regulations which shall be prescribed by the Board— (1)in any case in which one or more beneficiaries have been designated in advance, to such beneficiaries in accordance with such designation as provided in such regulations, and (2)in the case of any amount not distributed as described in paragraph (1), to such individual's estate.

258.

Guarantee of promised social security benefits

(a)

In general

In any case in which, for any month ending after the date on which a participant attains retirement age (as defined in section 216(l)(1))— (1)such participant’s assumed normal total part A retirement benefit for such month, exceeds (2)the sum of— (A)the monthly payment which is payable (or would be payable) for such month under a personal social security savings annuity with a monthly payment equal to the maximum amount that the participant's personal social security savings account can fund (irrespective of whether such an annuity is purchased and of the amount of the monthly payment actually payable under any personal social security savings annuity which is purchased), and (B)such participant’s assumed actual total part A retirement benefit for such month, the Secretary of the Treasury shall pay to such individual for such month, from amounts in the general fund of the Treasury (subject to section 6 of the Personal Social Security Savings Guarantee and Prosperity Act of 2011), an additional amount (if any) equal to the excess of the amount described in paragraph (1) over the amount described in paragraph (2).(b)

Definitions

For purposes of this section— (1)

Assumed normal total part A retirement benefit

The term assumed normal total retirement part A benefit means, in connection with a participant, the total amount of the monthly insurance benefits under section 202 based on such participant’s wages and self-employment income that would have been payable (as adjusted by taking into account adjustments under section 215(i)) if— (A)section 202(z) did not apply, and (B)all the beneficiaries had applied for such benefits during the month in which occurs the date on which the participant attains retirement age (as defined in section 216(l)(1)). (2)

Assumed actual total part A retirement benefit

The term assumed actual total part A retirement benefit means, in connection with a participant, the total amount of the monthly insurance benefits under section 202 based on such participant’s wages and self-employment income that would have been payable (after applying section 202(z) and as adjusted by taking into account adjustments under section 215(i)) if all the beneficiaries had applied for such benefits during the month in which such participant attains retirement age (as defined in section 216(l)(1)). For purposes of this paragraph, any entitlement of an individual to such benefits for which an application may have been filed prior to such month shall be disregarded.

259.

Personal Social Security Savings Board

(a)

Establishment

There is established in the executive branch of the Government a Personal Social Security Savings Board. (b)

Composition

The Board shall be composed of— (1)3 members appointed by the President, of whom 1 shall be designated by the President as Chairman; and (2)2 members appointed by the President, of whom— (A)1 shall be appointed by the President after taking into consideration the recommendation made by the Speaker of the House of Representatives in consultation with the minority leader of the House of Representatives; and (B)1 shall be appointed by the President after taking into consideration the recommendation made by the majority leader of the Senate in consultation with the minority leader of the Senate. (c)

Advice and consent

Appointments under subsection (b) shall be made by and with the advice and consent of the Senate. (d)

Membership requirements

Members of the Board shall have substantial experience, training, and expertise in the management of financial investments and pension benefit plans. (e)

Length of appointments

(1)

Terms

A member of the Board shall be appointed for a term of 4 years, except that of the members first appointed under subsection (b)— (A)the Chairman shall be appointed for a term of 4 years; (B)the members appointed under subsection (b)(2) shall be appointed for terms of 3 years; and (C)the remaining members shall be appointed for terms of 2 years. (2)

Vacancies

(A)

In general

A vacancy on the Board shall be filled in the manner in which the original appointment was made and shall be subject to any conditions that applied with respect to the original appointment. (B)

Completion of term

An individual chosen to fill a vacancy shall be appointed for the unexpired term of the member replaced. (3)

Expiration

The term of any member shall not expire before the date on which the member's successor takes office. (f)

Duties

The Board shall— (1)administer the program established under this part and issue regulations necessary for the administration of such program; (2)establish policies for the investment and management of the Savings Fund, including the Tier I Investment Fund, and amounts held under Tier II Investment Options, including policies applicable to the asset managers, recordkeepers, and custodians with responsibility for managing the investment of amounts credited to personal social security investment accounts, and for the management and operation of personal social security savings annuities, which shall provide for— (A)prudent investments suitable for accumulating funds for payment of retirement income; (B)sound management practices; and (C)low administrative costs; (3)review the performance of investments made for the Tier I Investment Fund; (4)review the performance of investments made under Tier II Investment Options; (5)review the management and operation of personal social security savings annuities; (6)review and approve the budget of the Board; and (7)comply with the fiduciary requirements of part 4 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 (relating to fiduciary responsibility) in connection with any exercise of discretion in connection with the assets of the Savings Fund. (g)

Administrative provisions

(1)

In general

The Board may— (A)adopt, alter, and use a seal; (B)except as provided in paragraph (4), direct the Executive Director to take such action as the Board considers appropriate to carry out the provisions of this part and the policies of the Board in accordance with delegations under this part; (C)upon the concurring votes of 4 members, remove the Executive Director from office for good cause shown; (D)provide to the Executive Director such resources as are necessary to carry out the duties of the Executive Director; and (E)take such other actions as may be necessary to carry out the functions of the Board. (2)

Meetings

The Board shall meet— (A)not less than once during each month; and (B)at additional times at the call of the Chairman. (3)

Exercise of powers

(A)

In general

Except as provided in paragraph (1)(C), the Board shall perform the functions and exercise the powers of the Board on a majority vote of a quorum of the Board. Three members of the Board shall constitute a quorum for the transaction of business. (B)

Vacancies

A vacancy on the Board shall not impair the authority of a quorum of the Board to perform the functions and exercise the powers of the Board. (4)

Limitations on investments

The Board may not direct any person— (A)to invest, or to cause to be invested, in any specific asset any sums which are in the Tier I Investment Fund or which are otherwise credited to any personal social security investment account, or (B)to dispose of, or cause to be disposed of, any specific asset of such Fund or any such account. (h)

Compensation

(1)

In general

Each member of the Board who is not an officer or employee of the Federal Government shall be compensated at the daily rate of basic pay for level IV of the Executive Schedule for each day during which such member is engaged in performing a function of the Board. (2)

Expenses

A member of the Board shall be paid travel, per diem, and other necessary expenses under subchapter I of chapter 57 of title 5, United States Code, while traveling away from such member's home or regular place of business in the performance of the duties of the Board. (3)

Source of funds

Payments authorized under this subsection shall be paid from the Tier I Investment Fund, as determined appropriate by the Board. (i)

Discharge of responsibilities

The members of the Board shall discharge their responsibilities solely in the interest of the participants and their beneficiaries under this part. (j)

Annual independent audit

The Board shall annually engage an independent qualified public accountant to audit the activities of the Board. (k)

Submission of budget to Congress

The Board shall prepare and submit to the President, and, at the same time, to the appropriate committees of Congress, an annual budget of the expenses and other items relating to the Board which shall be included as a separate item in the budget required to be transmitted to Congress under section 1105 of title 31, United States Code. (l)

Submission of legislative recommendations

The Board may submit to the President, and, at the same time, shall submit to each House of Congress, any legislative recommendations of the Board relating to any of its functions under this part or any other provision of law.

260.

Executive Director

(a)

Appointment of Executive Director

The Board shall appoint, without regard to the provisions of law governing appointments in the competitive service, an Executive Director by action agreed to by a majority of the members of the Board. (b)

Duties

The Executive Director shall, as determined appropriate by the Board— (1)carry out the policies established by the Board; (2)invest and manage the Tier I Investment Fund in accordance with the investment policies and other policies established by the Board; (3)administer the provisions of this part relating to the Tier I Investment Fund; and (4)prescribe such regulations (other than regulations relating to fiduciary responsibilities) as may be necessary for the administration of this part relating to the Tier I Investment Fund. (c)

Administrative authority

The Executive Director may, within the scope of the duties of the Executive Director as determined by the Board— (1)appoint such personnel as may be necessary to carry out the provisions of this part relating to the Tier I Investment Fund; (2)subject to approval by the Board, procure the services of experts and consultants under section 3109 of title 5, United States Code; (3)secure directly from an Executive agency, the United States Postal Service, or the Postal Rate Commission any information necessary to carry out the provisions of this part and the policies of the Board relating to the Tier I Investment Fund; (4)make such payments out of sums in the Tier I Investment Fund as the Executive Director determines, in accordance with regulations of the Board, are necessary to carry out the provisions of this part and the policies of the Board; (5)pay the compensation, per diem, and travel expenses of individuals appointed under paragraphs (1), (2), and (6) from the Tier I Investment Fund, in accordance with regulations of the Board; (6)accept and use the services of individuals employed intermittently in the Government service and reimburse such individuals for travel expenses, authorized by section 5703 of title 5, United States Code, including per diem as authorized by section 5702 of such title; (7)except as otherwise expressly prohibited by law or the policies of the Board, delegate any of the Executive Director's functions to such employees under the Board as the Executive Director may designate and authorize such successive redelegations of such functions to such employees under the Board as the Executive Director may consider to be necessary or appropriate; and (8)take such other actions as are appropriate to carry out the functions of the Executive Director.

.

3.

Monthly insurance benefits in connection with participants in the Personal Social Security Savings Program

Section 202 of the Social Security Act (42 U.S.C. 402) is amended by adding at the end the following new subsection: (z)

Benefits in the case of participants under part B

(1)Notwithstanding any other provision of this title, subject to paragraphs (2) and (3), the amount of any old-age insurance benefit under subsection (a) of a participant under part B and any other monthly insurance benefit under this section based on the participant’s wages and self-employment income (as determined before applying any reduction or deduction otherwise applicable under this title) shall be reduced by a percentage equal to the product derived by multiplying 50 percent by a fraction— (A)the numerator of which is the present value of the total amount of the contributions made with respect to the participant to the Personal Social Security Savings Fund under section 254, and (B)the denominator of which is the present value of the total amount of the contributions which would have been made with respect to the participant to the Personal Social Security Savings Fund under section 254 if contributions under section 254 had been made with respect to such participant for all of such participant’s benefit computation years (as defined in 215(b)(2)(B)((i)), determined— (i)as if the program established by this part had been in effect as of the beginning of such participant’s first benefit computation year, and (ii)without regard to section 6 of the Save Social Security Act. (2)Paragraph (1) shall not apply with respect to child’s insurance benefits under subsection (d) or mother’s or father’s insurance benefits under subsection (g). (3)In the case of old-age insurance benefits of an individual who was entitled to disability insurance benefits under section 223 for the month preceding the month in which such individual attained retirement age (as defined in section 216(l)), such benefit shall be subject to a reduction under this subsection, in lieu of the reduction otherwise applicable under paragraph (1), equal to the product derived by multiplying— (A)the amount of such reduction otherwise applicable, by (B)a fraction— (i)the numerator of which is the number of calendar years, ending after the participant attained age 21 and beginning before the date on which the participant attained age 61, during each of which the participant was not entitled to disability insurance benefits under section 223 or was so entitled for fewer than 6 months, to (ii)40. .

4.

Tax treatment of accounts

(a)

Personal Social Security Savings Program

Subchapter F of chapter 1 of the Internal Revenue Code of 1986 (relating to exempt organizations) is amended by adding at the end the following new part: IX

Personal Social Security Savings Program

Sec. 530A. Personal Social Security Savings Program

530A.

Personal Social Security Savings Program

(a)

General Rule

The Personal Social Security Savings Fund and each Tier II Investment Option are exempt from taxation under this subtitle. Notwithstanding the preceding sentence, sums in a personal social security savings account which are attributable to a Tier II Option shall be subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable, etc. organizations). (b)

Distributions taxed as social security benefits

See section 86 for tax treatment of distributions from personal social security savings accounts and personal social security annuity as social security benefits. (c)

Estate tax treatment

No amount shall be includible in the gross estate of any individual for purposes of chapter 11 by reason of an interest in the Tier I Investment Fund of the Personal Social Security Savings Fund or held under a Tier II Investment Option and which is credited to the personal social security savings account of the individual. (d)

Definitions

For purposes of this section— (1)

Personal social security savings account

The term personal social security savings account means an account established under section 253(b) of the Social Security Act. (2)

Personal social security savings annuity

The term personal social security savings annuity means an annuity purchased under section 257 of the Social Security Act. (3)

Personal Social Security Savings Fund

The term Personal Social Security Savings Fund means the Savings Fund established under section 252 of the Social Security Act. (4)

Tier I Investment Fund

The term Tier I Investment Fund has the meaning given such term by section 251(8) of the Social Security Act. (5)

Tier II Investment Option

The term Tier II Investment Option has the meaning given such term by section 251(9) of the Social Security Act.

. (b)

Annuity and guarantee payments

Paragraph (1) of section 86(d) of the Internal Revenue Code of 1986 is amended to read as follows: (1)

In general

For purposes of this section, the term social security benefit means any amount received by the taxpayer— (A)by reason of entitlement to— (i)a monthly benefit under title II of the Social Security Act, (ii)a tier 1 railroad retirement benefit, or (iii)a payment under section 258 of the Social Security Act (relating to guarantee of promised Social Security benefits), or (B)as a payment from a personal social security savings account or a personal social security savings annuity under section 257 of the Social Security Act. . (1)

Clerical amendment

The table of parts for subchapter F of chapter 1 of such Code is amended by adding after the item relating to part VIII the following new item: Part IX. Personal Social Security Savings Program. . (c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2011.

5.

Reimbursement of Spending Reduction Account from savings resulting from Personal Social Security Savings Program

Section 201 of the Social Security Act (42 U.S.C. 401) is amended by adding at the end the following new subsection: (o)(1)At the end of any reimbursement year, the Managing Trustee shall transfer from the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund (hereinafter in this subsection referred to as the Trust Funds) to the Spending Reduction Account of the Treasury, in amounts determined appropriate by the Managing Trustee in relation to each of the Trust Funds, such sums as are necessary to reimburse the Spending Reduction Account an amount equal to the reimbursement amount for such year. (2)For purposes of this subsection— (A)The term reimbursement year means a year for which, as estimated by the Managing Trustee, there is a Savings Program excess balance in the Trust Funds at the end of such year. In determining the amount of any excess under this subparagraph, the Managing Trustee shall disregard any excess in the Trust Funds which would be attributable to the operation of such Trust Funds if this Act had not been enacted. The estimation made pursuant to this subparagraph for a reimbursement year shall be made not later than November 1 of such reimbursement year. (B)The term Savings Program excess balance for a year means an amount by which the total balance in the Trust Funds at the end of such year exceeds (before the application of this subsection) 100 percent of the total amount of benefits to be payable from the Trust Funds for the succeeding year. In determining the amount of any excess under this subparagraph, the Managing Trustee shall treat as excess in the Trust Funds only the amount by which the excess is greater than the amount which would be the excess in the Trust Funds if the Save Social Security Act had not been enacted. (C)The term reimbursement amount for a reimbursement year means the lesser of— (i)the total amount of payments made during such year and prior years from the Spending Reduction Account of the Treasury under sections 254 and 258 for which reimbursement has not been made under paragraph (1), including interest at a rate equal to the rate applicable from time to time for obligations issued to the Trust Funds under subsection (d), or (ii)the Savings Program excess balance for the reimbursement year. (3)The total amount transferred under paragraph (1) as the reimbursement amount for any reimbursement year shall be available, until expended— (A)first, for reimbursement of the amount of payments made under section 254 during the reimbursement year, (B)second, for reimbursement of the amount of payments made under section 258 during the reimbursement year, (C)third, for reimbursement of any unreimbursed amount of payments made under section 254 during prior years, together with interest accrued on such amount, and (D)finally, for reimbursement of any unreimbursed amount of payments made under section 258 during prior years, together with interest accrued on such amount. .

6.

Funding of Personal Social Security Savings Program from Credits for Reductions in Federal Spending

(a)

Spending Reduction Account

There is established in the Treasury of the United States a Personal Social Security Savings Program Spending Reduction Account (hereafter in this section referred to as the Spending Reduction Account . (b)

Expenditures from General Fund of Treasury Limited to Amounts Credited to Spending Reduction Account

(1)

In general

Amounts which, but for this section, would otherwise be payable from the general fund of the Treasury to carry out section 254(a)(2) and 258(a) of the Social Security Act (as added by this Act) shall be payable only from the Spending Reduction Account and only to the extent of the available balance in such Account, as provided in this section. (2)

Crediting to Spending Reduction Account of amounts saved from program reductions

(A)

In general

From time to time during each fiscal year, the Secretary of the Treasury shall credit to the Spending Reduction Account the amount of savings to the Treasury for such fiscal year derived (as determined by such Secretary in consultation with the Director of Office of Management and Budget) from legislation providing for the reduction or termination of Federal programs which were in effect on the date of the enactment of this Act. To the extent that any such legislation provides for savings with respect to multiple fiscal years, the Secretary of the Treasury shall provide for crediting to the Spending Reduction Account for each such fiscal year of the amount of savings properly attributable to such fiscal year pursuant to such legislation. (B)

Annual report of amounts in Fund necessary for full funding of payments

Not later than April 15 preceding each fiscal year beginning on or after October 1, 2012, the Director of the Office of Management and Budget— (i)shall, in consultation with the Personal Social Security Savings Board, report to each House of the Congress the amount determined by the Board, based on reasonable projections, as necessary to provide for timely payment in full of amounts otherwise payable, but for this section, from the Spending Reduction Account for such fiscal year, and (ii)shall include in such report recommendations for reductions or terminations of Federal programs in effect on the date of the enactment of this Act necessary to provide for savings sufficient to provide for crediting of funds to the Spending Reduction Account sufficient to provide for payments under sections 254(a)(2) and 258(a) of the Social Security Act. (3)

Reduction in payments as necessary commensurate with extent of reductions in other programs

(A)

In general

The total amount payable under sections 254(a)(2) and 258(a) of the Social Security Act for any fiscal year shall be payable only to the extent of the total amount that the Director of the Office of Management and Budget determines, based on reasonable projections made in advance of such fiscal year and reported pursuant to subparagraph (B), will be credited to the Spending Reduction Account for such fiscal year pursuant to paragraph (2) (plus any amounts remaining for expenditure pursuant to subparagraph (D)). (B)

Annual report of OMB regarding sufficiency of Fund

The Director shall set forth the determination made under subparagraph (A) with respect to each fiscal year in a report to each House of the Congress not later than September 1 preceding such fiscal year, based on legislation enacted prior to such date. (C)

Pro rata reductions in case of insufficiency

In any case in which the determination made under subparagraph (A) for any fiscal year indicates, as determined by the Director, a projected insufficiency for such fiscal year in the balance of the Spending Reduction Account to make all payments from the Spending Reduction Account during such fiscal year in full when otherwise due, such payments shall be reduced on a pro rata basis in relation to the projected amounts available from time to time in the Spending Reduction Account for such payments during the fiscal year. (D)

Restoration of reduced payments

In any case in which, as of the end of any fiscal year, a balance remains in the Spending Reduction Account after payment in full when due of all payments payable during such fiscal year, additional payments shall be made from such balance so as to restore, to the maximum extent practicable, payments which were made in prior fiscal years in reduced amounts pursuant to this subparagraph to amounts constituting payment in full of such payments. (E)

Carryover of Account balances

Amounts credited to the Spending Reduction Account for a fiscal year which are not expended as of the end of such fiscal year shall remain available for expenditure in subsequent fiscal years until expended. (4)

Limitations

(A)Savings for any fiscal year may only be taken into account under paragraph (2) once. (B)Savings taken into account under paragraph (2) may not be taken into account for the purposes of any other spending reduction account. (C)Notwithstanding any other provision of law, no provision of any amendment made by this title may be carried out except to the extent that funds for such provision are provided for such purpose from the Spending Reduction Account. The Secretary of the Treasury shall make such additional pro rata reductions in payments for any fiscal year to the extent necessary for compliance with the preceding sentence. (5)

Lockbox

(A)

General rule

Savings credited under paragraph (2) to the Spending Reduction Account may not be transferred or spent for any purpose other than to carry out the provisions of this Act and the amendments made thereby. (B)

Enforcement

If any amount is transferred or spent in violation of subparagraph (A), no amount may be transferred to the Savings Reduction Account on and after the date of such violation. The determination of whether an amount is transferred or spent in violation of subparagraph (A) shall be made irrespective of whether such provision of law is a subsequently enacted provision or directly or indirectly seeks to waive the application of this paragraph.

7.

Interim financing of the Social Security Trust Funds

Subsection (l) of section 201 of the Social Security Act (42 U.S.C. 401(l)) is amended to read as follows: (l)(1)If at any time on or after January 1, 2012, the Managing Trustee determines that borrowing authorized under this subsection is necessary in order to ensure that sufficient assets are available in the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund to provide for timely payment in full of benefits from such Trust Fund, the Managing Trustee may borrow such amounts as the Managing Trustee determines to be appropriate from the general fund of the Treasury for transfer to and deposit in such Trust Fund. (2)If in any month after a loan has been made to either Trust Fund under paragraph (1), the Managing Trustee determines that the assets of such Trust Fund are sufficient to permit repayment of all or part of any loans made to such Trust Fund under paragraph (1), the Managing Trustee shall make such repayments as the Managing Trustee determines to be appropriate to provide for prompt repayment of the loans, together with accumulated interest. Interest shall accumulate on the unpaid balance of the loan at a rate equal to the rate applicable on the date of the loan for obligations issued to the Trust Fund under subsection (d). (3)The Board of Trustees shall make a timely report to the Congress of any amounts transferred under this subsection. .