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February 03, 2005 at 07:00 PM
Annuities could play an important role in the proposed private Social Security account program.[@@]
Officials who insisted on anonymity discussed that program detail Wednesday during a background briefing that took place before President Bush delivered his State of the Union speech.
Many Democrats are opposing the private account proposal, and even some Republicans appear to object.
But, if Congress approves the Bush proposal, the private account program could end up resembling federal employees’ popular Thrift Savings Plan, according to the officials who gave the briefing.
- Investment options: Bush talked during his speech about offering a menu of investment options similar to those offered by the Thrift Savings Plan. Thrift plan members have a choice of 5 funds: A government securities fund, a fixed-income fund, a common stock index fund, a small-cap stock fund and an international stock index fund.
Barclays Global Investors, San Francisco, manages 4 of the funds, and a plan board manages the fifth fund, the government securities investment fund.
- Who would get the private accounts? The officials who gave the briefing said the administration believes accounts would be phased in, and the schedule for phasing the program in would be based on the ages of the participating workers. Starting in 2009, workers born in 1965 or earlier who participate in the private account program might gain complete investment control over their accounts, the official said.
- How much could workers contribute? Up to 4% of their income. The initial cap might be $1,000.
- How would retirees tap the account funds? When workers with private Social Security accounts retired, the funds would be put in annuities, and the annuities would pay out income to retirees over time.
