England Tried Bush's SS Plan - Lost Billions

[BeatleBoot]

http://www.washingtonpost.com/wp-srv/politics/special/security/stories/oss111698.htm

<snip>
One need only look at England's experience with Social Security reform. In what has become known as the "mis-selling" controversy, high-pressure sales tactics were used to persuade people to switch out of the public pension system and into unsuitable private accounts. These sales practices, coupled with inadequate regulation, led to billions of dollars in losses for investors.


http://www.cbsnews.com/stories/2004/12/13/opinion/main660830.shtml

<snip>
If Wall Street gets its hands on this money, with everyone going to his or her local bank or brokerage house -- as is the case with the privatized systems in England and Chile -- the costs could be thirty times as high as the cost of our Social Security system. When the administrative costs are combined with real numbers on stock returns, the individual accounts will provide no better returns on average than the government bonds currently held by the Social Security trust fund.


http://www.cepr.net/ssrr/2005_01_18.htm
<snip>

By contrast, in England and Chile, where they already have privatized systems, 15 cents of every dollar are eaten up by administrative fees paid largely to private firms. The President’s Social Security commission estimated that private accounts would have 5 percent administrative costs, almost ten times the current costs.

[trotsky]

1. Oh I have no doubt the 'pukes are fully aware of this.

And that's why they want to do it. Steering all that money towards the Wall Street brokers & investment houses. Grandma can just starve & die for all they care.

[BeatleBoot]

2. I am concerned about the permanently disabled

In most cases Social Security is their only income.

So, let's say you are a young worker and you opt into the privatization scheme.

Let's say you start "investing" at age 18 and at age 25, you get in an automobile accident and are permanently disabled. I doubt that 7 years of "investing" will carry you through the rest of your life.

What about stroke victims or the seriously mentally ill?

It boggles my mind that the GOP can be that heartless - all the while saying that they are the "party of God".

[punpirate]

3. I don't think it's just about fees...

... at least directly. Yes, Wall Street would love more management fees. However, there's something else at work here that suggests that this is an outright swindle--a scheme to divert tax money to prop up the markets.

For ages, I've been wondering why the pukes keep saying that SS is going to go bust by 2018. There's absolutely no evidence of it, by any realistic measurement--whether from the CBO, or SS itself. Why is that date important?

Here's why. The first of the baby boomers, those that have done well in life, will begin to retire, at age 62, by 2008. Most will have worked for companies which offered, as a primary retirement benefit, a 401(k) plan. Upon retirement, they no longer are contributors to the plan, nor are their employers. They are also required by law to begin drawing out of that plan within roughly five years after retirement. Even those born in 1946 who retire at 65 or 66 stop contributions to their plans by 2011 or 2012.

That means that a steady, guaranteed flow of money into the markets begins to cease in 2008, and that flow into the system further declines through 2014 to 2015 (and keep in mind that boomers born from 1946 through 1949 are a significant portion of the boomer demographic). By 2018, the first three years' worth of boomers are starting to draw money out of their 401(k) plans.

Without a new source to replace that money, the market, overall, will begin to decline. Once it does, it's too late--there's no trust in individuals that it will improve in the near term.

They've got to do it now--otherwise, the market starts to sag badly at a time before the implementation of any rescue plan.

My guess is that the 2018 date comes from the actuarial people on Wall Street--that's when the market, not Social Security, goes critical. In this sense, it's about management fees--if the market goes into a steady, slow tailspin from loss of income, investors will begin putting money into much safer and more traditional investment vehicles, like savings accounts, and then the market management services start to hemorrhage.

The Bushies may have an ideological hatred of Social Security as a "socialist" program (it's very, very likely that Bush himself does, given his background and some of his comments made in graduate school), but this proposal of the Bushies is still a rescue plan for Wall Street.

Cheers.

[trotsky]

6. That sure does make a whole lot of sense.

Nice, albeit scary, analysis.

[JaneQPublic]

4. CBSNEWS ran a great piece on it last night

Correspondent Shiela MacVicar explored the outcome of Great Britain adopting a form of privatized social "pension" funds back during the Maggie Thatcher era.

MacVicar talked to some British officials who say that, as a result of privatizing, their elderly are now getting only a portion of the retirement funds they would be getting otherwise.

There was a great clip of a line of nude British men, covering their private parts with a long banner proclaiming "Stripped of our Pension." The Democrats need to make sure every American sees that.

Here's a link to the news video:

http://search.atomz.com/search/?sp-q=Great+Britain+privatize&sp-k=&sp-t=search&sp-a=sp1001c63c&sp-p=phrase&sp-f=ISO-8859-1&sp-s=1

[Skittles]

5. um HELLO BeatleBoot

this is exactly what bush inc WANTS to happen - SOMEONE got that money; in America it would go to BUSH THIEVES

[Yupster]

7. Good article in Wall Street Journal today

detailing each country's similar programs and showing what we can learn from them.

It covers England, Sweden, Poland, Argentina, Chile and Singapore. Interesting.