The Permanent Retirement System
A Funded, Ownership-Based End State
The Goal is a permanent retirement system in which workers accumulate personally owned assets, secure lifetime retirement income, and can pass remaining assets to heirs. The PRAUSA Plan replaces the open-ended pay-as-you-go financing now used for Old-Age and Survivors Insurance retirement benefits with funded ownership, while preserving a strong federal role in regulation, administration, and participant protection.
THE DESTINATION
Retirement Security Built on Ownership
Current Old-Age and Survivors Insurance (OASI) obligations are financed principally from payroll taxes collected from today’s workers, supplemented by taxation of benefits and trust-fund resources. The permanent PRAUSA system changes the financing model itself. Each worker accumulates identifiable assets in a Personal Retirement Account (PRA) held for that worker’s retirement and protected beneficiaries.
Contributions are invested through regulated, diversified, professionally managed options. Over a working lifetime, contributions and investment earnings build the resources used to provide retirement income. The worker enters retirement with funded property rather than relying exclusively on a statutory claim financed by later workers.
At the end state, the legacy OASI payroll-financed retirement structure has ended. The federal government continues to establish and enforce the legal framework, maintain or supervise required records, certify actuarial adequacy, qualify providers, enforce fiduciary duties, and protect participants. It no longer finances retirement through an open-ended transfer from future workers.
THE PERMANENT STRUCTURE
Ownership With National Safeguards
Individual ownership. PRA assets and investment earnings are legally attributable to the participant. Like an IRA or a federal Thrift Savings Plan account, the balance is individually identified and invested for retirement. Unlike an ordinary voluntary account, the PRA is part of a mandatory national retirement system and is governed by strict contribution, custody, withdrawal, payout, and consumer-protection rules.
Lifetime income and inheritance.
At retirement, accumulated resources first secure the lifetime-income amount required under the Plan, protecting the participant against outliving retirement assets. Resources above that requirement remain personal property and may pass to designated beneficiaries under the governing rules.
Professional investment. The system uses regulated, diversified, low-cost investment options, prudent defaults, transparent reporting, and enforceable fiduciary standards. The federal Thrift Savings Plan demonstrates that large-scale, professionally administered retirement saving can operate for millions of participants. PRAUSA applies that operating principle to a distinct purpose: replacing OASI retirement financing with individually owned accounts for the covered workforce.
Risk management.
Funded ownership does not eliminate market or longevity risk. It manages those risks openly through diversification, lifecycle or prudent default options, low costs, fiduciary oversight, actuarial certification, and lifetime-income requirements.
Public oversight.
Government protects the system and its participants through regulation, administration, enforcement, and actuarial oversight. It does not own, control, borrow, invest, spend, or otherwise use PRA assets for any governmental purpose.
THE FINANCIAL RESULT
Comparable Retirement Income at a Lower Mandatory Cost
The Plan’s mature-system objective is to provide lifetime retirement income meeting the governing retirement-adequacy standard at a lower mandatory contribution rate than the current 10.6 percent OASI tax. The current end-state design target is approximately 6.0 percent of covered wages through the national median-wage cap, subject to independent actuarial certification.
Mandatory contributions are capped at the national median covered wage. For earnings up to that cap, the mature target is approximately 4.6 percentage points below the existing 10.6 percent combined OASI rate. Above the cap, the OASI payroll tax has ended and no mandatory PRA contribution applies, although workers remain free to save voluntarily.
The Plan is designed so the released payroll burden accrues to workers as compensation rather than remaining a tax or being redirected to another federal purpose. The exact payroll mechanics require legislation, but the economic objective is explicit: finance the actuarially certified retirement outcome and return the remaining compensation to workers as additional take-home pay.
These figures are governing Plan targets, not settled actuarial findings. Independent scoring must test the contribution rate, retirement-income result, wage cap, market assumptions, administrative costs, and distributional effects under baseline and adverse conditions.
STRUCTURAL PERMANENCE
A Retirement System Designed to Remain Funded
Conventional reforms can extend solvency by adjusting taxes, benefits, formulas, or retirement ages while retaining pay-as-you-go financing. The Goal changes the structure: each generation funds its own retirement instead of renewing an open-ended obligation for the next generation.
Reaching the Goal
The Transition explains how current beneficiaries remain protected, how accrued value is preserved through notional retirement credits, how Retirement Transition Certificates provide temporary liquidity when needed, how funded PRAs expand, and how the legacy system closes under binding fiscal rules.
Permanent funding does not mean that every parameter remains unchanged forever. Longevity, investment conditions, costs, participation, and distributional effects require continuing oversight. The Plan uses prospective stabilizers and actuarial certification to adjust future parameters without confiscating accrued assets or reopening an unfunded pay-as-you-go system.
The Goal is the proposed destination submitted to the Social Security Reform Working Group. The Group must test the contribution rate, investment design, lifetime-income structure, participant protections, administrative feasibility, and effects across different workers before the system can be considered ready for legislation.
Help Build the Framework for Permanent Social Security Reform
PRAUSA welcomes qualified individuals and institutions prepared to contribute expertise, analysis, leadership, or support to the Social Security Reform Working Group.
Contribute to the Work
Qualified professionals and institutional representatives may request to participate.
Keep Informed
Receive occasional updates on the Working Group, relevant research, and development of the framework.