Why Would Anyone Ask a Politician? Ask an Actuary!
Topic: "Social Security Reform"
Edward C. Lane, a retired Actuary, who participated in the project to reform the federal retirement system in the 1980's, has written a partial summary of the impact of a transition to individual accounts;
---Investment risk is transferred to the participant,
---Longevity risk is transferred to the participant,
---Inflation risk is transferred to the participant,
---Late entrants to the workforce lose out,
---Low wage earners lose out,
---Non-working spouses lose out, and
---Transition to individual accounts for those under age 55 will NOT leave older workers in status quo.
He writes, "In summary, individual account plans have their place in retirement planning. But, it needs to be recognized that these plans do not promise benefits of any type. Rather, they focus on the cost of those benefits and the control of that cost. All risks are transferred to the participant, including the ability of the benefit to meet basic needs."
For a complete transcript, see http://www.actionforum.com/forum/scores.html?&comment_id=213193
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