Restructuring Social Security, Ver. 1.1.1
Jack E Johnston
The New Pension Plan for USA Citizens
The University of California (UC) probably has one of the best pension plan management in the country and should be used as a role model to restructure the Social Security Administration (SSA). Breaking apart to its component parts results in a “Non-Profit, Academic Institution, managing a pension plan for its members”. The present SSA uses new investor’s funds to pay unearned dividends to the matured investors. The 401K and 403B plans put the pension plans in the hands of inexperienced investors. My Stock Broker of many years, states “Stock brokers have the highest turnover rate of any profession. A lot of people want to become Stock Brokers, but few are successful”. The 401K-403B investors have only a few choices of investment provided by their employer, or they need to find a fund manager or manage their investments themselves. There is a slim chance they will find a successful investment manager; there is also a slim chance of investing with a dishonest investor that steals their invested funds, and they themselves have a long learning curve to go through to be successful investors in their pension plans.
The Structure of the USA Pension Plan
The model of UC can be multiplied several times over using “non-profit, academic organization to manage pension plans for our citizens”. With a choice of Academic organizations there will be competition between the academic organizations which should produce excellent rate of returns on investments for our citizens, especially if they can move their pension plan from one academic organization to another and the non-profit academic organization are allowed to collect a small management fee (1-3% prorated) of the funds invested for managing the pension funds, they will have even more incentive to produce excellent rate of returns on investments. Rate of returns for the various academic organizations should be made available to the public. This program results in smaller government, something that is supported in the conservative Congress. The funds will be out of the control of the government, so legislators trying to balance a budget will not have access to the pension funds, this should produce long-term stability.
The Benefits of the Pension Plan for USA Citizens
The Budget will benefit as the nation will not have the expense of operating the SSA and the government will be only be in a subsidizing position resulting in a smaller government. The transition from the present SSA system of paying the mature investors with new investor’s funds will probably have to be a negotiated transition and could be coordinated with the 401K and 403B programs.
The Non-profit, academic organization will produce income and will be able to lower the cost of admissions to their academic organization resulting in more educated citizens and greater tax dollars to the USA Government.