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 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 Social Security Reform 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.
Lifetime retirement income. Normal full retirement age is 67, subject only to a prospective Longevity Stabilizer adjustment for future cohorts. At retirement, the protected-income portion of the participant’s PRA is converted through a qualified Universal Lifetime Income Contract (ULIC), or an actuarially equivalent regulated product, into inflation-protected lifetime income. Applicable family protections are privately priced within the participant’s all-in contribution ceiling. Assets not required for protected lifetime income remain personal property under the Plan’s payout and inheritance 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. The Social Security Reform Project 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
There is no single permanent PRA contribution rate. Each participant finances an individualized employee-only all-in Individual Adequacy Contribution Rate (IACR), capped at 10.6 percent of PRA Reference Earnings up to the governing contribution base. The normal base is 1.50 times the Reference Full-Time Median Wage; 1.75 times is the first certified fallback.
For a full-career worker, the rate is designed to support inflation-protected lifetime income of at least 1.10 times the Reference OASI Benefit Schedule worker amount at the applicable full retirement age. Where the participant’s IACR is below 10.6 percent, the difference is a pre-income-tax compensation/cash-flow difference; after-tax take-home pay depends on ordinary tax treatment.
When the transition is complete, both OASI payroll-tax obligations end permanently. Each employer’s former 5.3 percent OASI contribution becomes employee compensation. There is no mandatory employer PRA contribution.
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.
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