The current social security system should not be replaced by a mandatory private pension system.

The current social security system should not be replaced by a mandatory private pension system

In the light of the global pension crisis , there is a growing concern in the US that the current social security system might be replaced by a mandatory private pension system . Such a development is touted in many public media and is beginning to enter public minds as a reasonable option . The main reason is the rising expenditure in the Social Security system that is taking a heavy toll on the US budget . Ben Bernanke predicts that [banner_entry_middle]

government spending on Social Security and Medicare alone will increase from about 7 percent of the economy to almost 13 percent by 2030 and to more than 15 percent by 2050 (Aversa , 2004 . This is caused by the fact that privatization will not remove the problems associated with Social Security today , even aggravate in fact the financial crisis in the system . Moreover , it will further disadvantage the already disadvantaged members of the society In addition , privatization of pension accounts has already been a disappointment in many other countries , in particular in Chile

In the first place , it is hard to see how the privatization is likely to solve the financial problems associated with the Social Security . The projected windfall will not go away because part of the contributions that earlier went to Social Security will go to private accounts . In any case , the Social Security system cannot dishonor its obligations to the citizens that have for years been diligently contributing to its funds and helped pay the benefits for the earlier generations when they were young

Therefore , advertising the privatization as a solution to the financial problems in the system is enterprise as it will take adoption of new laws that could support the new system , would require the creationg of new government infrastructure to oversee the accounts , and in general remove a viable source of funding for the current Social Security . Reducing the size of benefits would be a much more workable way to solve the problem that would then have at least some sort of logical solution

Besides , Social Security in its current state effectively serves one of its initial goals – serve the underserved and those who are insecure under the current system . For example , research by the Century Foundation shows that African Americans also have traits that lead to greater benefits under Social Security : a higher disability rate , more survivors receiving benefits , and lower average wages (Anrig , Wasow 2004 . This category of people will become more vulnerable if the current Social Security system is replaced by the private system . The same is true for Latinos that have a longer life expectancy which leads them to profit from longer term of payouts . The average woman also stands to lose more than an average man since she works fewer years outside the home , earns less per year , and lives longer after retiring (Anrig , Wasow , 2004

Not to be discarded is the fact that the Chilean privatization of… [banner_entry_footer]