Bush Loves Pinochet's Crappy Pension Reform.

[reprehensor]

Why? Because he's a knucklehead.

(That's Prezdint Knucklehead to you.)

Chile's Retirees Find Shortfall in Private Plan

By LARRY ROHTER

SANTIAGO, Chile - Nearly 25 years ago, Chile embarked on a sweeping experiment that has since been emulated, in one way or another, in a score of other countries. Rather than finance pensions through a system to which workers, employers and the government all contributed, millions of people began to pay 10 percent of their salaries to private investment accounts that they controlled.

snip

The Chilean example also makes clear that introducing private accounts does not solve a lot of the problems faced in the United States, Europe and Japan, where pay-as-you-go systems remain the principal means of government retirement support.

Over all, Chile has spent more than $66 billion on benefits since privatization was introduced. Despite initial projections that the system would be self-sustaining by now, spending on pensions makes up more than a quarter of the national budget, nearly as much as the spending on education and health combined.

snip

Among the admirers of the privatized system here is Mr. Bush, who on a visit in November called Chile "a great example" for other countries. On other occasions, he has suggested that the United States could "take some lessons from Chile, particularly when it comes to how to run our pension plans."

The main architect of the Chilean system is José Piñera, who was labor and social security minister from 1978 to 1980 during the Pinochet dictatorship. Mr. Piñera is now chairman of the International Center for Pension Reform, co-chairman of the Cato Institute's Project on Social Security Choice, and he has been a board member of several Chilean corporations.

more@link

[BuyingThyme]

2. Pinochet & Bush

Have a lot in common.

[papau]

3. goggle andy lang for info on how many ways Chile has been a disaster

I'm getting ready for a nap!

but the NYT doesn't seem to lie -"On the other hand, Chile was careful before it started its private system to accumulate several years of budget surpluses, in contrast to the recent large deficits in the United States." LOL :-)

the only glaring error is the NYT's high return comment that ignores the low return those fund have earned in the last decade.

[yellowcanine]

4. Milton Freedman advised Chile on their system so it figures Bush would

would like it. Freedman essentially agrees with Grover Norquist that smaller government is best and the way to make it smaller is to starve it to death.

[hadrons]

5. Chile's Retirees Find Shortfall in Private Plan

SANTIAGO, Chile - Nearly 25 years ago, Chile embarked on a sweeping experiment that has since been emulated, in one way or another, in a score of other countries. Rather than finance pensions through a system to which workers, employers and the government all contributed, millions of people began to pay 10 percent of their salaries to private investment accounts that they controlled.

Under the Chilean program - which President Bush has cited as a model for his plans to overhaul Social Security - the promise was that such investments, by helping to spur economic growth and generating higher returns, would deliver monthly pension benefits larger than what the traditional system could offer.

But now that the first generation of workers to depend on the new system is beginning to retire, Chileans are finding that it is falling far short of what was originally advertised under the authoritarian government of Gen. Augusto Pinochet.

...

Dagoberto Sáez, for example, is a 66-year-old laboratory technician here who plans, because of a recent heart attack, to retire in March. He earns just under $950 a month; his pension fund has told him that his nearly 24 years of contributions will finance a 20-year annuity paying only $315 a month.

"Colleagues and friends with the same pay grade who stayed in the old system, people who work right alongside me," he said, "are retiring with pensions of almost $700 a month - good until they die. I have a salary that allows me to live with dignity, and all of a sudden I am going to be plunged into poverty, all because I made the mistake of believing the promises they made to us back in 1981."

http://www.nytimes.com/2005/01/27/business/worldbusiness/27pension.html

[RaleighNCDUer]

Now, there's an idea.

"I am going to be plunged into poverty, all because I made the mistake of believing the promises they made to us back in 1981."

Make the investment plan optional, and let the wingnuts follow their leader. Maybe, in 30 years and they have to depend on it, they'll get what we're saying.

(Yeah, I know, letting them do this would gut SS, but I can dream.)

[rodeodance]

Would you rather have a Pinochet invented saving plan or a FDR

saving/retirement plan?--per Carville on Crossfire!!

[Turbineguy]

6. Well yes, but

does anybody here believe that Bush's plan is for the benefit of retirees?

[Nite Owl]

7. Isn't it amazing how these

Repukes want to emulate a failed system like Chili's but refuse to implement a single payor system for healthcare that that is proven to work.

[htuttle]

8. It's not that amazing...

...if you realize that the Republicans have basically turned into a criminal gang of racketeers. They only have one question about proposed government policies, "What's my vig?"

[Nite Owl]

1. Well that's what I meant

if there is something in it for them it doesn't matter if it works but if it is solely for the people or the right thing to do forgetaboutit.

[whistle]

9. Here is an experiment to see how well this will work for you....

...go back to 1999 and look up your favorite stocks at that time. Create a portfolio of stock investments based on the funds that would normally be available through Social Security (FICA) withdrawals from your regular paychecks. Invest in those stocks knowing that like IRA's and Social Security you could roll them over to other stocks, funds or financial instruments without penalty, but that withdrawal completely and conversion to cash or other liquid assets (i.e. gold, commodities, etc) is not allowed. Then march that investment forward deducting the payments from each check and see what happened to those investments under the events of the 2000 through 2004. Don't be surprised if you lost your shirt and ended up with noting to retire on with social security.

The real world will be much different because, as a pool of money such as what privatized social security is created, you can bet that wall street fat kats will be stealing those funds blind. We also have no idea what government will do regarding the capital gains from such investments 20 to 30 years out, I would not be surprised if the money is taxed both as income and capital gains, thus creating a double deferred tax penalty for most average investors. The exceptions will always be there for the very rich, but that will not ever be available to us little people. There is no free lunch, even though the republicans know how to deduct them so they and their rich buddies never pay their fair share. These republican bastards are already scheming as to how best to separate Americans from their hard earned cash.

[rodeodance]

10. I agre, the banking/investment industry will be the ones collecting the

most.

[whistle]

11. I found this recent article which I thought was pretty good

<snip>

A Bloody Mess
From our February 2005 issue: How has Britain’s privatization scheme worked out? Well, today, they’re looking enviably upon Social Security.
By Norma Cohen
Web Exclusive: 01.11.05

Print Friendly | Email Article

A conservative government sweeps to power for a second term. It views its victory as a mandate to slash the role of the state. In its first term, this policy objective was met by cutting taxes for the wealthy. Its top priority for its second term is tackling what it views as an enduring vestige of socialism: its system of social insurance for the elderly. Declaring the current program unaffordable in 50 years’ time, the administration proposes the privatization of a portion of old-age benefits. In exchange for giving up some future benefits, workers would get a tax rebate to put into an investment account to save for their own retirement.

George W. Bush’s America in 2005? Think again. The year was 1984, the nation was Britain, the government was that of Margaret Thatcher -- and the results have been a disaster that America is about to emulate.

For all the fanfare that surrounds the Bush administration’s efforts to present a bold new idea on pension reform, the truth is that it is not new at all. In fact, the proposal looks suspiciously like the plan set in train during Thatcher’s first term in 1979 and which has since led Britain to the brink of a crisis. Since then, the nation’s basic pension, which is paid for out of tax receipts, has shrunk dramatically. The United Kingdom has the stingiest state pension program of any G8 nation, and there is growing consensus -- even among British conservatives -- that reform is needed. And ironically enough, considering that America is on the verge of copying Britain’s mistake, most experts seek reform in the direction of a more generous, and simpler, basic state pension -- one similar in design, in other words, to America’s Social Security program.

<link to more> http://www.prospect.org/web/printfriendly-view.ww?id=8997

[reprehensor]

12. I've been looking for that, thanks!

[struggle4progress]

13. Recognizing W's true heroes: priceless