IPI Releases Proposal on Social Security Reform

CSE is working hard to bring real reform to the Social Security program, in particular by creating Personal Retirement Accounts that workers own and manage. CSE tracks the overall debate and brings you the latest proposals.

With that in mind, last Friday the Institute for Policy Innovation (IPI) unveiled a Social Security proposal that supports the creation of Personal Retirement Accounts (PRAs). The group labels the plan “progressive”, owing to the fact that the payroll taxes off the first $10,000 can be put into a PRA at 10%, while the rest can only be put in at 5%. IPI realizes that payroll taxes make it impossible for many low-income workers to own financial assets, and PRAs will enfranchise them in new ways by giving them an opportunity to be owners. The think tank also points out benefits to the economy and the ability to pass down PRAs to one’s heirs as even more evidence of the plan’s progressiveness.

This plan would allow private investment fund managers to offer their plans to the Treasury Department. Contributors could then choose between the different plans offered. The payroll tax that is not put into PRAs can be used as a safety net for those that do not get the expected returns. Because Social Security will run a surplus in the short term, those that are close to or near retirement will be able to receive the money “promised” to them by the federal government.

View the Full Proposal