| -- End Ad Box ---> | | | | by future legislation. The plan must be kept: simple |
| As an investor, I've always wondered why Social | | | | and profitable for providers; painless and visible to |
| Security is such a problem. What's so difficult | | | | participants; timely and comprehensible to retirees. |
| about managing this particular Trust Fund, and | | | | The SSRIA is a new and improved version of the |
| why is it so different from other investment | | | | ancient Deferred Fixed Annuity Contract... a boring |
| accounts that pay out a constant stream of | | | | but guaranteed retirement benefit vehicle, funded |
| income? The private sector does it routinely with | | | | by both mandated and voluntary payroll |
| defined benefit pension plans and fixed annuities, | | | | deductions, with a whole bunch of new wrinkles |
| so what's the big deal? Is Social Security failing | | | | that make it an ideal Social Security replacement |
| because it hasn't been invested soundly, or is | | | | program. For example, and unlike existing annuity |
| there some other reason? | | | | contracts: 1) Participants will be allocated to |
| The most obvious explanation is politics, but we're | | | | "qualified SSRIA providers" so there will be no |
| running out of time for finger pointing, and Social | | | | sales commissions, no business acquisition or |
| Security is solvable in a surprisingly painless | | | | retention costs, no advertising expenses, etc. 2) |
| manner. It will require a whole new approach that | | | | All SSRIA contracts (regardless of provider) will |
| uses old ideas and institutions in ways that most | | | | contain the same terms, interest guarantees, |
| of us have pretty much given up on. As hopeless | | | | retirement benefit choices, and pre-retirement |
| as the Bush Administration's Nicotine Patch for | | | | death benefits, thus eliminating any incentives for |
| Social Security would have been, it pointed in the | | | | internal fraud and manipulation of statistics. 3) |
| right direction. Now don't hit DELETE when I refer | | | | Qualified providers will establish separate |
| to "privatization", or when I mention one of my | | | | subsidiaries to manage and control SSRIA |
| own most hated financial products, the "annuity". | | | | operations and to assure that only high quality, |
| Both are needed to permanently fix the Social | | | | income securities are used to fund future benefits. |
| Security mess, to get it away from people who | | | | 4) All qualified providers will use the same |
| are neither managers nor investment specialists, | | | | mortality, investment earnings and expense |
| and to make the whole system work more | | | | assumptions, and all benefits will be fully |
| economically. The purpose of this article is to get | | | | guaranteed by the parent corporations. |
| you to think about it... and to elect a hero with the | | | | The SSRIA is a supplemental retirement program, |
| guts to fix it. Unfortunately, Joe DiMaggio has left | | | | funded by a much smaller, yet flexible, payroll |
| the building! | | | | deduction, and it is designed to be the foundation |
| Are you surprised that there is no "Social Security | | | | of a retiree's total retirement package... a benefit |
| Trust Fund"... no investments and no Investment | | | | floor. Participants will choose (annually, for the |
| Managers? This is a gigantic Government designed | | | | following year) to deposit from the required 2% |
| and controlled Ponzi scheme that has worked | | | | up to a maximum 4% of their Pre-Tax Income |
| incredibly well in spite of congressional tinkering | | | | to their personal SSRIA, a contract that will follow |
| and prohibitively high cost. There was always a | | | | them everywhere, from employer to employer, |
| tax plan for funding the benefits, but never an | | | | throughout their working years. Before |
| Investment Plan. And as difficult as it is for me to | | | | retirement, a death benefit equal to the full cash |
| admit, no sophisticated Investment Plan is really | | | | value of the contract will be paid to the |
| necessary. We just need a new (reduced) | | | | designated beneficiary. At retirement, participants |
| contribution plan, one that isn't designed to fund | | | | can elect either a Life Annuity or a Joint & 50% |
| every politically sensitive entitlement that | | | | Survivor Annuity. No variable plans of any kind will |
| compromises itself down the aisle. We need a | | | | ever be allowed; there will be no loan privileges, |
| simplified benefit structure that supplements | | | | withdrawals, or dividends. Providers are expected |
| privately funded (untaxed) retirement programs. | | | | to make a reasonable profit, which will ultimately |
| [Healthcare just has to be a separate issue, | | | | be determined by their operating and investing |
| perhaps an actual (managed) Trust Fund, and | | | | abilities... hmmm, I smell capitalism. |
| certainly something that should not be funded by | | | | Employer sponsored benefit programs and |
| private citizens until there is meaningful tort | | | | individual savings and investments are expected |
| reform in this country.] Pshew! Back to the point... | | | | to make up the bulk of private retirement |
| We can eliminate all the unnecessary bells and | | | | programs. The SSRIA will assure that everyone |
| whistles simply by mandating personalized benefit | | | | has something, but individual savings and |
| funding. Let the politicians deal with homeland | | | | retirement plans, both company sponsored and |
| security while the private sector deals with things | | | | personally funded, will be encouraged by new IRS |
| financial. | | | | policy. No retirement income, regardless of source |
| After the repeal of the Social Security tax and | | | | will be subject to income taxation! Neither |
| implementation of mandated Individual Retirement | | | | employers nor self-employed persons will be |
| Plan Contributions, the Social Security bureaucracy | | | | required to make matching contributions of any |
| will retain several important functions: 1) Qualifying | | | | kind to employee SSRIAs. However, they will be |
| private sector companies and licensing them to | | | | encouraged to use their improved cash flow to |
| provide Social Security Retirement Income | | | | increase employment or to reduce prices, perhaps |
| Annuities (SSRIAs). Thousands of providers will be | | | | by a new system that will reduce their corporate |
| needed, but only, fixed income experienced, | | | | income tax obligations as a reward for boosting |
| profitable companies need apply. 2) Developing a | | | | the economy. Similarly, billions of dollars of |
| computerized system for participant/provider | | | | discretionary spendable income will find its way |
| matching... inspired randomness is essential. 3) | | | | back into the economy from consumers whose |
| Proactive monitoring of compliance with the | | | | payroll deductions have been slashed deservedly. |
| minimal rules, installation of fraud detection | | | | Subsequent articles will deal with: SSRIA Providers, |
| systems, and investigation of all violations by | | | | Participation Rules, Transitioning the Change at |
| providers, participants, and retirees, 4) Keeping | | | | Four Levels, and Dealing with the Obscenely |
| the plan sacred, simple, and principally unchanged | | | | Overpaid. |