March 10, 2005
Personal Accounts Neither 'Boon nor Burden' for Social Security Trust Fund, Says RBS Greenwich Capital Chief Economist
Who addresses the lesser talked about issues of Social Security reform? You hear ranting and raving across the aisle, but no new ideas from one side and weak sales pitches from the other.
According to RBS Greenwich Capital, the actuarial impact would be minimal, and assuming that you get what you pay for, the proposed system seems to cover most of the bases so the over 55s don't get left behind. When selling a Corvette, you wouldn't expect to hear the salesman to spend 95% of the time talking about the trunk space. That is what is happening now, and could be the death of reform.
In order to energize the nation with Social Security reform, the main selling points must be pitched. Rarely do you ever hear the discussion of how personal accounts can be passed on to your children, as oppose to the person who dies at 67 and one week old who paid into a pension for a measly, 200 and change. The arguments go both ways, however few shed light on how personal accounts could help people learn about investing and saving for the future. Social Security has never been a retirement plan. It is pulled out of the employee and employer’s pocket and left for bickering politicians to manage. Where do you want your money?
RBS Greenwich Capital Press Release:
RBS Greenwich Capital, a leading fixed-income investment bank, today released the third installment of a four-part series on Social Security called, "Social Security Reform: Personal Accounts."
Written by RBS Greenwich Capital's Chief Economist, Stephen Stanley, the report details the macroeconomic implications of personal accounts and examines the actuarial impact they would have on the Social Security trust fund. Mr. Stanley also sheds light on some of the philosophical and political arguments for and against personal accounts.
"Transition costs for personal accounts should not be a hurdle," said Mr. Stanley. "From a macroeconomic standpoint, personal accounts should have a neutral to slightly positive impact on national savings."
Mr. Stanley added, "Personal accounts do not fix Social Security and do not have a negative effect on the actuarial status of the Social Security trust fund. The main rationale for personal accounts would be ideological, namely to encourage personal ownership and responsibility and to restructure the entire relationship between the federal government and its citizens."
For more information on Stephen Stanley's third installment or to receive a copy of the report, please contact Todd Miller at Cubitt Jacobs & Prosek Communications, 203.378.1152, ext. 149.
Posted by Tom Troceen