[Congressional Record Volume 151, Number 50 (Friday, April 22, 2005)]
[Extensions of Remarks]
[Pages E734-E735]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            INTRODUCTION OF RETIREMENT SECURITY ACT OF 2005

                                 ______
                                 

                          HON. THOMAS E. PETRI

                              of wisconsin

                    in the house of representatives

                        Thursday, April 21, 2005

  Mr. PETRI. Mr. Speaker, today I am introducing the Retirement 
Security Act of 2005. This bill addresses the financing problems facing 
the Social Security Trust Fund through the creation of Personal Social 
Security Investment Accounts for each newborn child. This plan would 
establish a mechanism for reducing the long term fiscal pressures 
facing Social Security without changing the current benefit structure 
or diverting payroll taxes from the Trust Fund.
  My bill seeks to use the benefits of the private market to place 
Social Security on a sound financial footing, as do a number of other 
reform plans. But more than that, I seek to maximize the magic of 
compound interest by opening savings accounts for future retirees as 
soon as they are born. Under the Retirement Security Act, the Federal 
government would create a personal investment account for each newborn 
American child with an initial government contribution of $1,000. The 
account would be invested in any of the funds available to Federal 
employees through the Thrift Savings Plan, and earnings would accrue 
tax free. Account holders, or the parents of minor account holders, 
would be free to make additional pre-tax contributions to these 
accounts and enjoy the opportunity to invest in these safe and well-
managed investment accounts.
  At retirement, each retiree would qualify for the same Social 
Security benefit as earned under the current Social Security system. 
Benefits would be paid first from each worker's personal account, and 
payments from the Trust Fund would begin only after the balance of the 
personal account had been depleted. Those who take advantage of the 
opportunity to make additional contributions may well find their 
balance in excess of the amount needed to fund their Social Security 
benefits, and these funds would belong to the individual investor. My 
bill provides a variety of options, including lump sum distributions 
and the purchase of life annuities with level or inflation-adjusted 
monthly payments for disposition of the surplus balance.
  An initial contribution of $1,000 invested today that grows at the 
average combined rate of return of the five Thrift Savings Plan 
investment options would grow to an inflation adjusted balance of 
$58,000 by retirement at age 67. For purposes of comparison, this 
amount would be enough to purchase an annuity with a monthly payment 
equal to 46 percent of the today's average Social Security retirement 
benefit. A single matching payment of $1,000 by a parent on the 
occasion of their child's birth would endow an account which would 
produce almost 100 percent of the average benefit and, perhaps just as 
important, give that child the gift of a lifelong savings vehicle which 
offers the potential of greater financial security in retirement than 
can be provided by Social Security alone.
  Clearly, the focus of my legislation is long-term. Social Security's 
fiscal problems will begin to pinch long before children born today are 
ready to retire. By now, we're all familiar with the projections 
provided in the annual report of the Social Security Board of Trustees. 
The Trustees have forecast that our current Social Security surpluses 
will turn to deficits by 2017 and that the bonds collecting in the 
Social Security Trust Fund will be fully redeemed by 2041. At that 
time, it's anticipated that payroll taxes will be sufficient only to 
pay 74 percent of expected retirement benefits. Though my legislation 
would make no other

[[Page E735]]

changes to Social Security, when combined with other reasonable reform 
ideas, it can provide a component of a comprehensive solution to Social 
Security's long and shorter-term financial problems.
  We've reached an important moment in the life of the Social Security 
program. It's obvious that we need to bring more money into the system 
to keep the promises we've made and to allow us to continue to offer 
some measure of retirement security. Personal investment accounts are 
one way to bolster the system, yet they have become the object of too 
much criticism and much disinformation. Many of our constituents have 
become concerned that the diversion of payroll tax revenue into 
personal accounts of today's workers will threaten the benefits of 
current retirees. A campaign is being waged which fosters these fears 
and may prevent the adoption of even those personal accounts which have 
no impact on the Social Security Trust Fund.
  My bill provides the opportunity for Congress to demonstrate that it 
can implement a system of personal accounts without diverting payroll 
taxes and that will build retirement savings for future generations 
without enriching stock brokers or introducing unacceptable investment 
risk to American workers. As the success of these personal accounts 
become apparent, growing numbers of Americans will have greater 
confidence in this avenue of reform, presenting opportunities to expand 
the use of personal accounts. The time has come for us to take this 
important step forward, and I encourage my colleagues to support this 
bill.

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