Hong Kong recently copied the Chilean system, Hungary plans to do the same and Australia recently instituted its own form of pension privatization. In the United States, President Bill Clinton and members of Congress have also concluded that reforming the Social Security system is both economically imperative and politically feasible. The Social Security trustees' most recent report confirms that by the year 2013 the Social Security trust fund will begin paying out more in benefits than it receives in payroll taxes - meaning that the government will have to raise taxes, borrow the money to pay the difference or cut benefits. Recognizing the impending crisis, President Clinton has called for town hall meetings to discuss the problem, and members of Congress have proposed expanding private savings options. Adhering to the 12 principles that follow will assure the success of the reform.
Guarantee benefits to current retirees.
Because they have counted on the existing Social Security system and incorporated it into their retirement planning, current retirees and those nearing retirement should be guaranteed the benefits they were promised. Younger workers who voluntarily choose to remain in Social Security should not receive the same guarantee. Give workers a choice between the public system and a private plan. People working and paying taxes into the system should have the option of remaining in Social Security or moving to a private plan. These funds would be invested in stocks, bonds and real assets that would fund the workers' retirement and other benefits covered by Social Security.