Yeah, right, Social Security is "steamrolling toward bankruptcy" in 30-40 years if we don't raise taxes, cut benefits, or grow the economy at more than 3% per year in the meantime.
As for the Chilean private pension system, according to a NYT article in 2006:
Other studies, including one conducted by the World Bank, indicate that pension funds retain between a quarter and a third of workers' contributions in the form of commissions, insurance and other administrative fees.
But skeptics point to another developing problem: many young people, who should be enrolling in the system early to accrue maximum benefit, are staying out or paying in very little. Some cannot afford to contribute beyond the obligatory minimum payment, which is 10 percent of wages, while others are either self-employed or have been hired by companies as low-paid independent contract workers and therefore do not have to contribute at all.Here's what an economist had to say in 2008 about Chile's system:
The myth that switching to private pensions relieves the state from their financial burden holds no water. [Chile's] 2008 budget sets aside U$ 5.6 bn in pension expenses. Of this no less than U$ 2 bn are for ‘Recognition Bonds’, the sums that the state transfers to private pension funds on behalf of beneficiaries who are making the transition from the old state system.According to him, competition among private pension funds has decreased over time, fees have not gone down, abuse and stealing of employees' pension contributions by employers (who are supposed to collect and forward them) is common, and still after 26 years only about half of Chileans participate in the voluntary private pensions. Moreover, the very poor are guaranteed the same minimum pension ($150) whether they contribute to the system or not, hence there is no incentive for them to participate and put aside part of their precious wages.
Finally, here's what your AARP has to say about Chile's private pension annuities:
http://www.aarp.org/research/
If you don't like SS and you think people should invest in private accounts, then you should advocate setting a cut-off date for current contributors, and ending SS altogether. But don't try to fit the square peg of private investments in the round hole of government bureaucracy. That's neither liberal nor conservative. Personally, I think of SS as a social safety net, not a pension system. I'm not making my work & investment decisions based on any anticipated SS retirement income. I think most younger people think the same.
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