Let’s K.I.S.S. Social Security Goodbye: Part 4

Providers:

All eligible providers will be required to accommodate Social Security Retirement Accounts, and will do so through a separate organizational entity or department with no other responsibilities. Every provider will be allowed to charge a management fee of 1% of the market value of the Trust, quarterly, and in arrears only. There can be no other fees or charges of any kind, including marketing, trading fees, or anything else. Each provider is solely and legally responsible for providing full and complete benefits to the participants in its managed Trust Fund, to the total extent of its corporate assets, above and beyond the Trust Fund. Providers will, as an employee pool of first resort, hire any displaced persons who are no longer needed in the newly streamlined federal Social Security Administration. The Pension Benefit Guarantee Corporation will insure all of the individual Trust Funds. 

The contents of the Managed Trust Funds are expected to be different, but no competitive statistics or propaganda can find its way into any advertising, which is limited to a simple statement of availability. It is expected that some funds will operate at more of a surplus some years than others. It’s OK. When the Federal SSRP Administration determines that a significant surplus exists, 25% of such surplus can be made available to the Health Care Trust Fund. 

Providers will be required to share the wealth with others in the industry, so that each becomes experienced, respected, and capable of handling the growth and responsibilities of the Trust Funds they manage. The Social Security Administration will monitor Fund asset size and membership to assure parity between providers. There will be no sales commissions of any kind. Participants will choose from a list of qualified providers, and their employers will deposit participants’ payroll deductions accordingly. The participant/benefit provider relationship is a permanent one, for life, in the interests of facilitating the goals of the program, and of keeping the system as simple as possible to administer.

Benefits:

Only two benefit payment plans will be available: (1) a fixed life annuity and (2) a lesser, fixed life annuity with a spousal or partner benefit. There will be no life insurance, disability insurance, and so on. All the pork will be gone. The amount of these retirement benefits will be calculated in the same manner as they are today, based on the amount contributed, duration of participation, etc. (The SSRIA is another alternative.)

Because individual retirement contributions will now be pooled and invested, the amount needed to provide benefits will become less and less instead of more and more. Beginning in the second year after implementation, Social Security salary deductions will be reduced 10% per year until they are roughly 40% of what they are today, and at that time, there will be no additional employer matching contributions. During this same five-year transitional period, all taxation of withdrawals from conventional individual retirement account (to retired persons only) will be reduced to zero. 

Finally, any citizen of the United States, working or not will be able to make a tax deductible contribution of up to $5,000 annually to a conventional IRA program, whether or not he or she is a participant in any other type of retirement plan. An additional after tax $5,000 can be contributed to a Roth IRA as well. There are no income restrictions, period!