Federal Workers Already Enjoy Privatized Retirement Plan
October 12, 2000
The proposal to allow workers to invest part of their Social Security payroll taxes in stocks or bonds is not a radical, wild-eyed idea -- as critics make it out to be. In fact, the federal government already runs such a retirement income program for its employees, including members of Congress and federal judges.
It's called the Thrift Savings Plan.
- It offers a choice of stock or bond funds or Treasury securities to workers who contribute through payroll deductions.
- Created by Congress in 1986, the plan had assets of $95 billion at the end of 1999.
- The stock fund's return of 13.19 percent for the year ended September 30 puts to shame the 3 percent earned by the Social Security trust fund in the same period.
- The fact that the American stock market has appreciated in every 20-year period in its history acts as a guarantee of the fund's resources -- and destroys the argument that a similar privatization of Social Security would be too "risky."
Contrary to another common charge, Wall Street would not be getting a windfall under such a plan. The new investments would be around $60 billion a year, a minute fraction of the $25 trillion now invested in financial markets.
Source: Donald B. Marron (Paine Webber Group), "A Safe Rescue for Social Security," New York Times, October 12, 2000.
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