Post by Sapphire Capital on Sept 8, 2008 20:34:36 GMT 4
Social Security Reform: Lessons from Private Pensions
Karen C. Burke
University of San Diego School of Law
Grayson M.P. Mccouch
University of San Diego School of Law
Cornell Law Review, Vol. 92, 2007
San Diego Legal Studies Paper No. #08-070
Abstract:
Widespread concerns about the long-term fiscal gap in Social Security have prompted various proposals for structural reform, with individual accounts as the centerpiece. Carving out individual accounts from the existing system would shift significant risks and responsibilities to individual workers. A parallel development has already occurred in the area of private pensions. Experience with 401(k) plans indicates that many workers will have difficulty making prudent decisions concerning investment and withdrawal of funds. Moreover, in implementing any system of voluntary individual accounts, it will be important to design default settings that provide appropriate guidance for workers with heterogeneous levels of financial sophistication and risk tolerance. The central goal of Social Security reform should be to close the fiscal gap in a way that preserves rather than undermines the existing system of mandatory defined benefits for all workers.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1230861_code224326.pdf?abstractid=1230861&mirid=2
Karen C. Burke
University of San Diego School of Law
Grayson M.P. Mccouch
University of San Diego School of Law
Cornell Law Review, Vol. 92, 2007
San Diego Legal Studies Paper No. #08-070
Abstract:
Widespread concerns about the long-term fiscal gap in Social Security have prompted various proposals for structural reform, with individual accounts as the centerpiece. Carving out individual accounts from the existing system would shift significant risks and responsibilities to individual workers. A parallel development has already occurred in the area of private pensions. Experience with 401(k) plans indicates that many workers will have difficulty making prudent decisions concerning investment and withdrawal of funds. Moreover, in implementing any system of voluntary individual accounts, it will be important to design default settings that provide appropriate guidance for workers with heterogeneous levels of financial sophistication and risk tolerance. The central goal of Social Security reform should be to close the fiscal gap in a way that preserves rather than undermines the existing system of mandatory defined benefits for all workers.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1230861_code224326.pdf?abstractid=1230861&mirid=2