Baloney. Even Sweden Is Privatizing Social Security
Sweden, a country whose name is almost synonymous with "welfare state," decided in June to partially privatize its retirement pension system. The country's leaders were finally forced to admit its cradle-to-grave benefits system was just too expensive and had damaged the economy.
* Under the new system, Swedish workers will set aside 18.5 percent of income for retirement.
* Two and a half percentage points of that will go into personal retirement accounts where it will be invested by a professional fund manager selected by the worker.
* The old system would eventually have required payroll taxes of 36 percent.
* Sweden's socialist government explicitly rejected the idea of having the government manage the funds since this would have resulted in gradual nationalization of major companies.
Under the reforms, the government-provided pension will be directly linked to the amount of payroll taxes the worker has paid. In effect, the government will maintain a shadow account that tracks annual payments. This shadow account will be credited with interest every year and then turned into an annuity at retirement.
Source: Daniel Mitchell (Heritage Foundation), "Sweden's Private Path," Washington Times, December 7, 1998.
For more on Private Alternatives in Other Countries ncpa.org
ncpa.org
Sweden isn't alone:
As Social Security reform sweeps across the globe, nations at all stages of development are shifting to systems based on personal retirement accounts. Among the nations that are similar to the United States, Australia has implemented a fully privatized system that was enacted by a Labor
government, and Britain has taken a partially privatized approach. In Western Europe, Denmark, Sweden, and Switzerland have moved, to varying degrees, to compulsory retirement savings. 15
Chile set up a very successful system nearly 20 years ago, and seven other countries in Latin America--Argentina, Bolivia, Colombia, El Salvador, Mexico, Peru, and Uruguay--have adopted similar systems of mandatory retirement savings. 16 Singapore has a private system (although government-controlled investment has resulted in paltry returns), and Hong Kong is implementing one. 17 In the former Soviet empire, Croatia, Estonia, Hungary, Kazakhstan, Latvia, and Poland either have privatized or are privatizing their pension systems. 18 In all of these cases, policymakers realized that reform was a good deal for workers, taxpayers, and retirees.
heritage.org |
