Article: A Direct Route to Social Security Reform

The traditional defined benefits pension is like an endangered species only found in protected wilderness preserves. Most businesses have already abandoned pensions for primarily worker funded defined contribution plans like 401Ks. Those that remain are in the process of being eliminated due to the unfair competitive pressures of global trade often linked to oppressive labor practices. Unlike nature's endangered species, which should be protected in their natural environments, traditional defined benefits pension plans should be systematically hunted down and eliminated from the American economy.

Forced and voluntary bankruptcies have often led to terminated pension plans or plans rolled over to the government's Pension Benefit Guaranty Corp. Typically, such transferred pensions pay out only a fraction of what was promised to the qualified employee due to incomplete funding. Since most municipal, state and federal pension obligations are also unfunded, they should be treated similarly. For example, the US Government has about $50 Trillion of unfunded obligations waiting to be paid by future generations, if at all. Why shouldn't government pensions suffer the same fate of most everyone else's?

Social Security the Solution
Social Security's projected financial problems have not been solved because politicians have had no personal motivation to do so. I am not a political activist, but as an educator, I would like to suggest a few ideas that might find some legs elsewhere and travel towards a solution in some form or another. My basic premise is that if we do not face these issues today, the social security and pension problems will grow beyond the bounds of reasonable solution in the future, possibly even threatening the collapse of the American economy and governmental structure as we know it today.

Here are the simplified steps of my proposal:
1. Segregate the Social Security Trust Fund.

2. Deposit all social security taxes into their designated accounts as collected.

3. Eliminate all federal government pensions and replace them with 401K plans similar to what most employees have the option to use. Open up access to municipalities and states to participate based on their guaranteed funding commitments, which could be raised through bond issues and/or scheduled annual budget commitments.

4. Fold all present government pension obligations into the social security administration under a special pension division that will calculate and pay a government pension supplement that will be added to the former civil servant's regular social security payment. The size of these pension supplement payments will be reduced from presently promised schedules using a formula similar to that used by the Pension Benefit Guaranty Corp. to calculate reduced payouts based on funding received.

5. Congress is to consciously commit to a fifty-year budget plan with a fixed schedule of inflation adjusted payments to fund the projected pension supplements to social security for former government workers as based upon typical life annuity schedules.

Since Congress and other government employees will become much more dependant on Social Security, they will see that it is protected for years ahead by guaranteed funding. The overall reduction of potential government pension liabilities on all levels will moderate pressures for tax increases, which will help to enhance the chances for continued economic growth. Municipalities and states facing bankruptcy due to unmanageable pension obligations will be given an honorable, responsible and fundable way out of their financial predicament. Finally, government officials will get a dose of reality of how it is to live as an average citizen of this nation.

I do not expect a great welcome from former or existing government officials for this idea, and yes, it includes veterans, but perhaps the average citizen will wake up and agitate for a responsible response to retirement community's projected financial apocalypse before it is already upon us and too late to be fair and orderly. Delay will only result in the future inability to honor pension commitments to government pensioners. If anything, pensioners will receive even less later by struggling to retain more now.