Implications of the Bush Commission Pension Reforms for Married Couples

Abstract

In December 2001 the President’s Commission to Strengthen Social Security published a report describing plans to reform Social Security through the introduction of new, privately managed, defined-contribution pension accounts. The new accounts are to be financed by diverting a portion of payroll taxes that are now used to finance pensions under the existing defined-benefit public pension system. This paper evaluates the overall impact of the Commission’s second plan on the distribution of retirement income and rates of return on pension contributions within and among future generations of married couples.