All it takes is bad performance for a couple of years and the state’s got no choice but to either cut benefits, increase taxes, and/or put employees into the Social Security system to save some short-term money.
And the same holds true for those very few workers over 50 who managed to save and invest sufficient money in their 401(k)s. They’re now on the cusp of retirement with far fewer assets and a far greater chance that they’ll be laid off and never hired again.
And the same holds true for younger workers. Many don’t save any money and, like health insurance, will not do so unless all are required to participate in a retirement program.
So what’s to be done?
Bring everyone into Social Security and raise the payroll tax contribution from 15 to 20-25%.
Remove the tax advantages associated with individual retirement plans, since people clearly aren’t saving enough, despite 30 plus years of being encouraged to do so. Those who wish to save money beyond their Social Security contributions can do so, and be taxed at long-term capital gains rates, which are far lower than marginal income tax rates.
Abolish the Pension Benefit Guaranty Corporation, which has nowhere near enough resources to fund pensions now and has become an easy target for companies to fob off their responsibilities to their workers.
Require companies and states to bring their pension plan resources into Social Security and provide a 10-year window during which companies and states must fully fund the difference between these resources and those required to fund the new Social Security pension.
All of this would be a better deal for employees and employers, and of course it has absolutely no chance of being passed by this or any other Congress.
Gorilla says: “If everyone knows what they’ll pay now, we can stop pretending that we’ll pay later!!!”
