Centralized investment offers the prospect of more revenues for the trust funds. Centralized investment would not change in any way the nature of workers' claims to future benefits, which is statutory at base, not contractual. Personal accounts would allow low-income workers to accumulate financial wealth and to share in the benefits of capital ownership. With centralized investment, workers' retirement incomes from social security would continue to be politically determined. These risks would be mitigated by the design of the government safety-net that buttresses all proposals for personal accounts.
Financial risks are present under both systems.
With centralized investment, the government would decide how much risk workers must bear through social security. This would be most disadvantageous to low-wage Americans. Personal accounts would create a system that is fully funded at all times and immune to the vagaries of uncertain demographic trends. Personal accounts would depoliticize social security to a considerable extent. Personal accounts would be consistent with significant pre-funding of social security and with a substantial increase in saving and capital investment.