The Social Security Reform Debate John Turner AARP Public Policy Institute 10 th International Pension Seminar Tokyo November 22, 2005 The Social Security Problem In 2041, the Social Security trust fund is projected to have insufficient funds to fully pay old-age benefits.
Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.
AARP Public Policy Institute
10th International Pension Seminar
November 22, 2005
These projections were done by the actuaries of the Social Security Administration.
1. Should Social Security be reformed by traditional changes in its benefits and financing, or should we add individual accounts?
2. If we have individual accounts,
should they be in addition to Social Security benefits or should they reduce Social Security benefits?
Conservatives tend to favor Social Security benefits being smaller than do liberals.
workers would contribute 10.4% to Social Security and 2% to an individual account.
Workers would receive a smaller benefit, calculated so that if they had invested their individual accounts in government bonds the total benefit from Social Security and the individual accounts would be the same.
The main points about the UK
– a complex system
-- the only example among high-income countries of voluntary carve-out individual accounts
Japan has such a system but for defined benefit plans, not individual accounts
Due to a lack of financial sophistication, many workers have been made worse off by taking the voluntary carve out (VCO) accounts
The “mis-selling” scandal—12 billion pounds have been paid to the victims ($24 billion dollars)