Advisers for President Bush decided late last week upon a proposal for restructuring the private accounts his administration wants to create in Social Security, but it's likely that Wall Street's profits from such a plan will be thin.

Under a plan recommended to Bush, the Associated Press reports, the private accounts would resemble many company-sponsored retirement plans, with just a handful of investment options.

Senate Democrats held a session on Capitol Hill on Friday to explore flaws in the proposal, which would let workers divert a portion of their Social Security taxes into individual accounts that could be invested in the stock market. Leading Democrats say Bush's claim that Social Security is in a crisis is "dead wrong."

The model for Bush's plan is the Thrift Savings Plan, a tax-deferred retirement investment plan for federal workers that minimizes risk at the outset by providing just three to five diversified investment funds. The default investment would be a lifecycle account, which reduces investment risk as a worker ages. The government would track a worker's account and give lump sums to a financial services company to invest. That approach is meant to keep administrative fees low, Bush officials said, and that would probably result in limited profits for Wall Street.

A second tier of investment options, where workers could choose from a greater number of mutual funds after their accounts top $5,000, would mean greater reward for fund firms. That idea is included in several bills pending on Capitol Hill, but no decision has been made whether to allow the second tier.

The prevailing expert opinion is that as the population ages, the number of Social Security benefit claims will outstrip the number of contributions. Opponents to the Bush plan say private accounts are too risky and that other, safer options exist.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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