[Congressional Record Volume 143, Number 114 (Wednesday, September 3, 1997)]
[Senate]
[Page S8728]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRAMS:
  S. 1145. A bill to amend the Social Security Act to provide 
simplified and accurate information on the Social Security trust funds, 
and personal earnings and benefit estimates to eligible individuals; to 
the Committee on Finance.


                  THE SOCIAL SECURITY INFORMATION ACT

  Mr. GRAMS. Madam President, I rise today to introduce legislation to 
require the Social Security Administration to provide key information 
to the American people for retirement planning.

  In that regard, I plan to send my bill to the desk in just a moment.
  But to explain that, every working American has a significant part of 
each paycheck designated to the Social Security Program, but few know 
how much they've contributed over their lifetime, the real value of 
their Social Security investment, or how much they'll need for a secure 
retirement.
  As average life-expectancy increases and the oldest baby boomers 
approach retirement, the answers to those three questions become 
critically important, for there's growing concern over the future of 
Social Security and how individuals should prepare themselves for 
retirement.
  Over the next 33 years, the number of retirees and their dependents 
who are eligible for Social Security benefits will increase by more 
than 100 percent; from 30 million in 1997 to more than 60 million in 
2030, while the number of workers 20 to 64 years old will increase by 
only 20 percent.
  By 2030, the ratio of workers per retiree will be the smallest ever, 
straining the entire Social Security system to the breaking point. Most 
of these older Americans will rely on Social Security benefits as their 
major source of retirement income.
  For many families, Social Security is the largest and most important 
financial investment they'll make, consuming up to one-eighth of their 
total lifetime income. Yet, the Federal Government remains 
unaccountable for the dollars working Americans have invested in the 
program.
  Current laws do not require the Social Security Administration, 
[SSA], the agency managing the Social Security trust funds, to send 
clear and complete account statements to individual taxpayers.
  Therefore, Americans don't receive adequate information about the 
retirement benefits they can expect to receive, the rate of return from 
their Social Security investment, or the future financial status of the 
Social Security trust funds--information, by the way, private 
investment agencies are required to provide to their investors.
  As a result, the vast majority of today's baby boomers won't be 
financially secure at retirement.
  My legislation would help to correct this problem and bring Social 
Security closer to meeting the disclosure requirements expected of 
private investment firms. This legislation will help ensure that 
working Americans receive the information they need to plan for a 
secure retirement.
  In 1989, Congress passed the personal earnings and benefits estimate 
statements, it is commonly known as PEBES. That legislation requires 
the SSA to send to eligible individuals statements on their yearly 
earnings and estimated benefits.
  A recent study by the General Accounting Office, the accounting arm 
of Congress, suggests that while the PEBES is useful, it is extremely 
difficult for average Americans to understand and, in fact, could be 
misleading. Therefore it isn't as effective as it could be or should 
be.
  Moreover, the current PEBES statement does not include the 
information an individual needs to most effectively plan for 
retirement.
  My proposal would require Washington to provide key information on 
the real value, or the yield, of a worker's investment in the Social 
Security Program by counting employers' contributions as workers' 
earnings to calculate the rate of return. Washington currently excludes 
this type of contribution from a worker's earnings statement.
  The employer's share of Social Security is a labor cost that's 
ultimately borne by the employee; it is only fair that it be counted as 
a worker's contribution.
  To ensure that the information is easy to understand, my legislation 
would also direct the SSA to provide benefit estimates in real rather 
than current dollars. To show the impact of inflation on Social 
Security benefits, consider the case of a typical individual retiring 
in 2043. That American is 25 years old today, retiring in the year 
2043.
  The current benefit estimate found in PEBES will tell this worker 
that he or she can expect to receive $98,989--nearly $100,000 annually 
in Social Security benefits. That sounds pretty good, doesn't it? But 
most workers will never consider the effects of inflation on this 
number. They'd never guess that an income of $98,989 in 2043 will 
actually be the equivalent of only $14,180 today because of inflation.
  If the PEBES includes such misleading information, it is likely that 
more working Americans will misunderstand and, therefore, overestimate 
the value of the benefits they will receive from Social Security. Only 
after it is too late will they find themselves financially unprepared 
for retirement.
  Not only would my legislation direct the SSA to include all of the 
most important information found in PEBES on a single, easy-to-read 
form, but the SSA would also be required to provide the current and 
projected balance in the Social Security trust funds, and let 
individuals decide on their future by providing them honest information 
today.
  With this information, Americans will be able to quickly and easily 
determine what the PEBES report is about and find the information 
essential to successful retirement planning.
  Working American need to know up front what they can and cannot 
expect out of the Social Security system compared against what they are 
paying into it.
  Giving individuals an honest accounting of that information serves 
the fundamental objectives of the Social Security Program by enabling 
workers to judge to what degree they should supplement their 
contributions with other forms of retirement savings such as pension 
plans and personal savings and investments.
  While much more needs to be accomplished to preserve and strengthen 
the Social Security safety net for today and tomorrow, the approach 
I've outlined would be an important first step in that attempt.
                                 ______