* Doug Pensinger ([EMAIL PROTECTED]) wrote: > Tell me. If, instead of making radical changes we tweaked the system; > tied increases to inflation rather than wages (as you suggested), > gradually increased the retirement age to, say 70, made benefits 100% > taxable above a certain level of total retirement income, etc. Would > that be enough to keep the system solvent?
I guess I haven't been clear (or perhaps you are confusing my position with Bush's confusing rhetoric). Most privatization plans that have been proposed neither increase nor decrease the SS funding deficit. The reason for privatization is not to close the deficit -- rather, it is to increase the efficiency of the system and to make it harder for the politicians to screw it up. (Okay, privatization may have a slight second order effect of improving the nations pension system, but only in the very long term as the 1% or 2% per year excess return of a portfolio containing 30% or 40% equities compounds over the years) We should do the things you mentioned (above) to close the funding gap AND we should privatize the system to increase the efficiency and durability of SS. Incidentally, I am not in favor of 100% privatization combined with full individual control of investments. That is a recipe for disaster, not security. The best plan I have seen (I quoted it in this thread) would go 100% privatized for all future contributions, but the funds would be invested automatically into a very broad world index of stocks and bonds, not under individual control. The next best option is partial privatization, no more than 1/3 of contributions privatized, but under individual control. That way the people who screw up their investments (and many would) will not lose the majority of their security. > I haven't seen you're opinion on the UK system that seems to be in so > much trouble and is looking to _our_ system as a possible solution. Overall (not just SS), UK is in much better shape than the US. I'd gladly trade our system for theirs. Thatcher indexed their pensions to cost-of-living years ago, so their obligations are rising more slowly. But the biggie is that their health-care system is much less expensive than ours. So yes, they do need to make some improvements in their old age insurance system, but they have a lot more resources to do it than the US because the rest of their system is in better shape. > How do we keep from having the same kinds of problems that they're > having? See the Kotlikoff PSS system that I posted in this thread. It is a very well designed system. Both the UK and the US would be much better off in the long term adopting such a system. -- Erik Reuter http://www.erikreuter.net/ _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
