Running Scared: Observations of a Former Republican
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"Losing my faith in humanity ... one neocon at a time."

Thursday, January 27, 2005

Have I got a deal for you

posted by Ron Beasley at 1/27/2005 09:53:00 AM


The Chilean private accounts plan is given as an example of success by proponents of a similar plan in the US. The truth is after 25 years Chile's Retirees Find Shortfall in Private Plan.
[S]ANTIAGO, Chile - Nearly 25 years ago, Chile embarked on a sweeping experiment that has since been emulated, in one way or another, in a score of other countries. Rather than finance pensions through a system to which workers, employers and the government all contributed, millions of people began to pay 10 percent of their salaries to private investment accounts that they controlled.
For all the program's success in economic terms, the government continues to direct billions of dollars to a safety net for those whose contributions were not large enough to ensure even a minimum pension approaching $140 a month.
Even many middle-class workers who contributed regularly are finding that their private accounts - burdened with hidden fees that may have soaked up as much as a third of their original investment - are failing to deliver as much in benefits as they would have received if they had stayed in the old system
Dagoberto Sáez, for example, is a 66-year-old laboratory technician here who plans, because of a recent heart attack, to retire in March. He earns just under $950 a month; his pension fund has told him that his nearly 24 years of contributions will finance a 20-year annuity paying only $315 a month.

"Colleagues and friends with the same pay grade who stayed in the old system, people who work right alongside me," he said, "are retiring with pensions of almost $700 a month - good until they die. I have a salary that allows me to live with dignity, and all of a sudden I am going to be plunged into poverty, all because I made the mistake of believing the promises they made to us back in 1981."
Hidden fees that took one third of their investment. You can see why Wall Street is so excited about the Bush plan, another way for them to get their hands in your pocket. They are not satisfied to get a chunk of the cash in your IRA's and 401K's they now want a piece of the "Secure" part of your retirement savings.
Make no doubt, the folks on Wall Street who pushed Enron and Worldcom are going to be throwing lots of money to Lawmakers, both Democrat and Republican. Let your Lawmakers know that your not fooled.

For a list of related posts see the Index of posts on Social Security.