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Highlights of Bush's Social Security plan

WASHINGTON—Key details of President Bush's proposal to create new personal investment accounts were disclosed Wednesday by senior administration officials briefing reporters at the White House. Highlights follow:

_Workers born after 1949 could divert 4 percent of their salary or about two-thirds of the 6.2 percent tax they now pay on wages up to $90,000 into the new accounts. Each account would be capped at $1,000 initially and would rise over time. Participation would be voluntary starting in 2009.

_Future traditional Social Security benefits would be cut for people enrolling in the new accounts to offset their switch to the new accounts.

_People born in 1949 or before would not be eligible to enroll in the new accounts. Social Security benefits promised to them will not change.

_Personal accounts would be modeled on the federal employees' Thrift Savings Plan, a pension program with low administrative costs, which offers only a handful of investment fund options, with varying degrees of risks.

_It will cost about $750 billion to pay transition costs to the new accounts between 2009-2015, the administration estimates. Social Security actuaries estimated that once it is fully in place, transition costs could total $2.2 trillion in the first decade and more after.


(c) 2005, Knight Ridder/Tribune Information Services.

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