On This Page
Scope & Status
Current Retirees & Earned Value
Notional Credits & RTCs
Personal Retirement Accounts
Financing
Professional Review
Scope and Status
What part of Social Security does The PRAUSA Plan address?
The Plan addresses Old-Age and Survivors Insurance retirement financing. Disability Insurance, Medicare, and other federal programs remain outside its scope because they serve different purposes and require separate analysis.
Is this a proposal to privatize all of Social Security?
No. The Plan does not transfer every Social Security function to private institutions. It replaces the OASI retirement-financing structure with a regulated national system of individually owned Personal Retirement Accounts while preserving federal administration, regulation, enforcement, actuarial oversight, and participant protection.
Is The PRAUSA Plan the final position of the Social Security Reform Working Group?
No. It is a developed starting proposal submitted for independent actuarial, economic, legal, administrative, investment, distributional, and legislative review. The Working Group is expected to identify weaknesses, test alternatives, and recommend improvements before broader institutional or legislative consideration.
Why does the Plan change the financing structure rather than merely adjust taxes or benefits?
Conventional reforms can extend solvency while retaining pay-as-you-go financing. The PRAUSA Plan seeks to end the recurring unfunded obligation itself by closing new legacy accruals and moving future retirement financing toward funded ownership.
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Protecting Current Retirees and Earned Value
What happens to people already receiving OASI retirement benefits?
Benefits already in payment remain obligations of the closed legacy OASI system. Scheduled payments continue under the governing transition rules; current beneficiaries are not moved into Personal Retirement Accounts.
What happens to workers age 56 or older when the transition begins?
Age 56 or older is the current governing Plan cutoff. Those workers remain in legacy OASI, and their scheduled benefits remain obligations of the closed transition system. Independent review must test the cutoff for cost, equity, administrative feasibility, and workforce effects.
Do workers younger than 56 lose the retirement value they have already earned?
No. Retirement value attributable to preimplementation covered work is converted into an individual notional retirement credit recorded on the Social Security Administration ledger. Postimplementation work continues earning retirement value under the new system rather than creating new legacy OASI benefits.
How are workers entering covered employment after implementation treated?
They do not enter legacy OASI. From their first covered earnings, retirement accrual is provided through the new system—using notional credits when funded PRA contributions do not yet provide the full certified accrual and funded PRA contributions as financing capacity becomes available.
Notional Credits and Retirement Transition Certificates
What is a notional retirement credit?
A notional retirement credit is a participant-specific statutory retirement claim recorded by SSA. It preserves preimplementation accrued value and, during transition years when funded PRA contributions do not provide the full certified retirement accrual, records the required additional accrual. It is not a market asset or a Retirement Transition Certificate.
What is a Retirement Transition Certificate (RTC)?
An RTC is an interest-bearing statutory certificate issued in lieu of an otherwise payable OASI cash benefit. Eligible beneficiaries may voluntarily defer from zero to 100 percent of an eligible payment. RTC principal and accrued interest remain owed and inheritable.
Does retirement accrual stop while funded PRAs are deferred?
No. Younger workers and new entrants continue earning retirement value. When funded PRA contributions do not yet provide the full certified retirement accrual, the difference is recorded as a notional credit. Funded PRA contributions progressively replace notional accrual as financing capacity becomes available.
When do funded Personal Retirement Accounts begin?
Funded PRA contributions begin or increase only after objective reserve, forward-buffer, fiscal, and qualified-market conditions are satisfied. The Plan does not assign an unsupported fixed activation year or permit funded contributions to displace higher-priority benefit and transition obligations.
How are RTCs redeemed?
RTCs become redeemable under the governing payment priority, reserve requirements, and available dedicated resources. Once an RTC is eligible for redemption, the holder may redeem it or may elect to continue holding it and earning the governing rate. Binding solvency scoring assumes redemption when permitted and does not depend on voluntary delayed redemption.
Is the transition permanent?
No. It is a temporary bridge. It closes only after legacy obligations have ended, remaining transition liabilities are satisfied or fully funded, benefit continuity is protected, and statutory closure and tail-coverage tests confirm that no participant is left without the retirement value required by the Plan.
Can an RTC ever be mandatory?
Yes, but only as a residual liquidity backstop. If voluntary RTCs and authorized resources are insufficient to satisfy a binding cash-flow or operating-reserve test, mandatory RTC deferral applies only to the certified amount required, beginning with the highest-net-worth eligible beneficiaries and subject to hardship protection.
Are RTCs backed by the federal government?
Yes. RTC principal and accrued interest are backed by the full faith and credit of the United States. The Plan nevertheless requires the transition cash-flow model to show that RTC obligations can be satisfied from authorized Plan resources without planned Treasury borrowing or general-revenue financing.
Personal Retirement Accounts and Ownership
Who owns the assets in a Personal Retirement Account?
The participant owns the account assets and investment earnings, subject to the national system’s contribution, custody, withdrawal, lifetime-income, and consumer-protection rules. The balance is individually identified and held for the participant’s retirement and protected beneficiaries.
Can the government borrow, invest, spend, or otherwise use PRA assets?
No. Government regulates and protects the system, but it does not own, control, borrow, invest, spend, or otherwise use PRA assets for any governmental purpose.
Who manages the investments?
Qualified providers administer regulated, diversified, low-cost investment options under enforceable fiduciary, custody, disclosure, and reporting standards. Prudent default or lifecycle options protect participants who do not wish to make active investment decisions.
Can remaining PRA assets pass to heirs?
Yes. After the required lifetime-income protection is secured, remaining assets continue as personal property and may pass to designated beneficiaries under the governing rules.
Investment, Lifetime Income, and Risk
Does a funded retirement system eliminate risk?
No retirement system eliminates risk. OASI depends on future taxpayers, demographics, economic growth, and legislation. A funded system adds market and longevity risk but addresses them openly through diversification, long investment horizons, low costs, prudent defaults, fiduciary oversight, actuarial certification, and lifetime-income requirements.
What happens when financial markets decline?
The system is designed for continuous contributions over a working lifetime rather than short-term trading. Diversification and age-appropriate investment strategies reduce concentrated exposure, while lifetime-income and actuarial rules protect the retirement objective. Independent adverse-scenario testing must determine whether the safeguards are sufficient.
How is inflation addressed?
Funded accounts hold financial assets with the potential for long-term growth, and the retirement-income design must be tested for purchasing-power protection. Inflation risk is not assumed away; it is part of the actuarial, investment, and lifetime-income review required before implementation.
Must retirees convert their entire account into an annuity?
The governing objective is to secure the lifetime-income amount required by the Plan so participants are protected against outliving retirement resources. Assets above that requirement remain personal property. The precise payout structure remains subject to professional review and legislation.
Financing and the Mature System
Will the transition raise the mandatory OASI payroll-financing rate?
No. The combined mandatory payroll-financing rate cannot exceed the existing 10.6 percent OASI rate, and the Plan cannot impose a separate mandatory PRA contribution on top of that ceiling.
Does the transition use federal borrowing or general revenue?
The primary transition financing model uses no planned external federal cash borrowing and no planned general-revenue transfers. RTCs are statutory obligations backed by the full faith and credit of the United States, but the model must demonstrate that principal and interest can be satisfied from authorized Plan resources. A scenario requiring the federal guarantee to be called because dedicated resources are insufficient is a Plan failure requiring corrective action.
What receives priority during the transition?
Higher-priority cash obligations and required reserves are protected before funded PRA contributions. If a projected liquidity shortfall remains, lower-priority funded PRA contributions are reduced or suspended first; voluntary RTC deferrals are recognized; mandatory high-net-worth RTC deferral fills only the certified residual need; and the one-time 0.5 percent benefit and one-year COLA backstops remain dormant unless the preceding measures are insufficient.
Why is the proposed permanent system structurally different from PAYGO?
In the mature system, each generation accumulates assets to finance its own retirement rather than renewing an open-ended claim on later workers. Prospective stabilizers and actuarial oversight may adjust future parameters, but accrued assets cannot be converted back into an unfunded pay-as-you-go promise.
How much additional take-home pay is the Plan designed to produce?
For earnings through the median-wage cap, the mature difference between the existing 10.6 percent OASI rate and the approximately 6.0 percent PRA target is about 4.6 percentage points. Above the cap, the ended OASI tax can release up to the full 10.6 percentage points. The Plan requires the released payroll burden to accrue to workers as compensation, subject to enacted payroll mechanics and independent validation.
What happens to mandatory retirement financing above the median-wage cap?
At the permanent end state, no mandatory PRA contribution applies above the cap and the OASI payroll tax has ended. Workers may continue saving voluntarily above the mandatory level.
What is the mature mandatory PRA contribution target?
The current end-state design target is approximately 6.0 percent of covered wages through the national median covered-wage cap. It is a Plan target—not a settled actuarial finding—and must be independently validated under baseline and adverse assumptions.
Professional Review and Participation
Who will evaluate the proposal?
The Social Security Reform Working Group is intended to bring together actuaries, economists, attorneys, investment and retirement professionals, policymakers, researchers, business leaders, and institutions capable of testing the Plan’s assumptions, implementation, distributional effects, and practical feasibility.
Are the governing Technical Specifications for Scoring public?
No. The governing Technical Specifications for Scoring, integrated model, and related working materials are proprietary controlled-review materials. They are provided only within approved Working Group or specifically authorized professional-review arrangements that include the applicable confidentiality requirements.
What materials are available to the public?
The public website provides The PRAUSA Plan overview, The Goal, The Transition, this FAQ, The PRAUSA Plan — Full Text in native online text and downloadable PDF form, and a public Technical Specifications for Scoring explanatory page describing the TSS’s purpose and restricted-access status. Additional approved resources, including Benefits of the PRAUSA Plan and International PRAs, may be published when completed and approved.
How can a qualified professional request participation?
Use a Request to Join button or select Request to Join on the Contact page. Both routes open the same unified inquiry form. Applicants should identify their professional role, relevant experience, and the contribution they could make to the Working Group.
How should media or institutional inquiries be submitted?
Use the Contact page and select Media Inquiry, Professional or Institutional Inquiry, Presentation Request, or Technical Inquiry. Media requests are identified separately so time-sensitive communications can receive priority.
Continue With the Governing Public Materials
The PRAUSA Plan
Review the integrated public overview of the destination, transition, and binding fiscal discipline.
The Transition
Examine participant protection, notional retirement credits, Retirement Transition Certificates, fiscal priorities, PRA activation, stabilizers, and closure.
The PRAUSA Plan — Full Text
Read the approved formal public document online or download the matching PDF.
Frequently Asked Questions
Practical Questions About The PRAUSA Plan
Answers to common questions about the scope, transition, financing, Personal Retirement Accounts, participant protections, and professional review of The PRAUSA Plan.