The figures are not ultraconservative. They assume a return equal to the 5 year treasury bond rate, which is of course a very low risk rate. The proposal as I understand it is to have private accounts borrow at 3% over inflation against the balance of their "traditional" SS benefit, a bit higher than the five year treasury bond rate, and to invest in stocks at a 100% margin (investing in bonds would not move the ball, except perhaps slightly backward if anything for the recipient). If stocks do not generate lower rather than returns higher than 3% over inflation, the recipient will be worse off. But Uncle Sam will be there, if it is much worse off. Thus the moral hazard.
and you either don't see a moral hazard in the system as currently constructed, or think that it can be practically resolved better how?