POLITICS - Social Security vs Personal Pension Plans

"Fox News shills for the man about Social Security" Rightardia 7/15/2010

Even though "you may not have enough money to retire on," Stu Varney still believes in privatizing Social Security.

Stuart Varney is a British-American economic journalist, currently working for the Fox News Channel and the Fox Business Network in the United States.

This is a complete crock and Varney has to know what happened in the UK when Maggie Thatcher privatized the UK social Security system.

In addition to the inappropriate advice offered by pension providers and the personal pension plans' complicated fee structure, other concerns have been raised about the U.K. pension system.

First, the complex system requires workers to choose among SERPS (state earnings-related pension scheme), personal pensions, or occupational pensions, which can be difficult.

Moreover, the best choice depends on each worker's characteristics such as how often he or she switches jobs or participates in the workforce. Second, choosing to invest in a personal pension rather than SERPS is particularly advantageous for younger workers.

The highest percentage of people with personal pension coverage is among full-time workers ages 25 to 34 (37 percent of males and 26 percent of females).

Because younger workers enter and leave the workforce more often than older workers, their contributions to personal pension plans tend to be more erratic and smaller.

Only half of those people with personal pensions in fiscal year 1992-1993 had positive wages in fiscal years 1990 through 1993.

In addition, only about 50 percent of participants in private pension plans made contributions beyond the government rebate to their accounts, raising some concerns about the adequacy of retirement savings.

Third, people with low earnings do not find personal pensions attractive because those pensions charge proportionately higher amounts for workers with low and unstable contributions.

As a result, the highest percentage of workers without an occupational or personal pension is among low-income workers: 65 percent of full-time workers earning more than the lower earnings limit of £64 but less than £100 a week had neither a personal pension plan nor an occupational pension plan.

The reduction of future SERPS benefits affects those workers the most; those workers could become a fiscal risk if their future retirement income must be supplemented by welfare benefits.

The bottom line is that the UK private pension system was a failure and most of the banks involved in the privatization scheme told their clients to go back to the government pension.

The UK system did not defer the risk away from the government. Many UK senior citizens may have to go on welfare to make ends meet they they retire.

Many people who retired after the new private pension system was put into law, lost half of their UK social security holdings.

Social Security FICA payroll tax is a forced savings plan. This tax has little in common with income Tax.

Republicans know that as this tax is reformed or the $108,500 caps raised, the tax will have more impact on affluent Americans.

Republicans don't want taxes to be raised on their base of 'have mores.'