The researcher argues that the insolvency problem facing Social Security is most usefully viewed as a symptom of the inadequacy of existing institutional mechanisms through which claims on labor income are made available to fund retirement security. The proposal advocates the establishment of markets in index perpetual claims and perpetual futures to price future streams of labor income. The Social Security Administration would act as a market maker for these derivatives markets. In the Social Mutual Fund framework, the assets of the fund would be the present value of claims to future labor income. The researcher argues that this market pricing process would result in a situation where Social Security assets were sufficient to cover Social Security liabilities.
