La Jornada (Ciudad de México)
14 de octubre de 2017
Como en México, Chile y otros países latinoamericanos, en Estados Unidos existe una creciente crisis en los sistemas para el retiro. Ello porque las cuentas individuales han remplazado las pensiones seguras.
Para planificar la jubilación, la analogía más recurrente alude al taburete de tres patas. El ingreso de la pensión individual derivaría de tres fuentes: el Sistema Nacional de la Seguridad Social (SNSS existente desde 1935); una pensión tradicional de beneficio definido (patrocinada por el empleador) y ahorros e inversiones individuales. Según los expertos, todas ellas deben sumar, al menos, 70 por ciento de los ingresos previos a la jubilación. El objetivo es mantener el nivel de vida que se tenía antes de la jubilación.
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The Growing Retirement Crisis in the United States
As in Mexico, Chile, and other Latin American countries, there is a growing retirement crisis in the United States as individual investment accounts have replaced secure pensions.
The analogy for U.S. retirement planning most often used is that of a three-legged stool. One’s retirement income will come from three sources—the three legs: the national Social Security system, in existence since 1935; a traditional employer-sponsored defined benefit pension; and individual savings and investments.
All sources of retirement income should add up to at least 70 percent of preretirement income according to experts. The goal is to be able to maintain a preretirement standard of living in retirement.
The three-legged stool was never a perfect analogy since one assumes that for a stool to be stable, the legs should be of equal length. The amounts of retirement income from the three different sources have been very different.
For those with the most secure retirement incomes, the largest sources comes from a traditional employer-sponsored defined benefit pension plan, followed by Social Security and savings in that order. These include most public sector workers, who make up a small minority of the labor force.
For most of the rest, including most private sector workers, Social Security makes up the largest source of retirement income, followed by incomes from an employer-sponsored plan and savings.
Let’s look at the sources of retirement income in depth.
Ninety-four percent of workers in the U.S. labor force contribute 6.2 percent of their wages to Social Security. Their employers match that with another 6.2 percent. Those contributions go into a collective fund out of which benefits are paid, including retirement income, payments for disability, and payments for children and other dependent survivors of participants who die early. Social Security is a classic social insurance plan in which people pay premiums to protect themselves from risks. The risks being protected against are income loss in retirement and disability, and being unable to support dependents.
Social Security works remarkably well. Nearly one out of every four households receives some form of Social Security income. It is the largest component of the minimalist U.S. welfare state.
According to studies, without Social Security, 40.5 percent of the over age 65 population would be poor. But because of the income it provides, the over 65 poverty rate is 8.8 percent, which is actually less than that of the general population.
Social Security enjoys tremendous public support. Majorities of all major demographic groups, including Republicans, support it. It is however deeply opposed by neoliberal think tanks, such as the Cato Institute and the Heritage Foundation, and by some parts of the financial services industry for economic reasons. They don’t like trillions of dollars of the country’s retirement savings being tied up in government accounts rather than going through Wall Street from which they can profit.
There is thus a continuing battle over maintenance of the Social Security program as it is or to privatize it as was done with IMSS in Mexico, following the Chilean model imposed under the Pinochet military dictatorship.
So far, the advocates of Social Security have been able to resist all privatization attempts due to the deep public support for the program.
Employer-sponsored retirement plans cover nearly all public sector workers but only about half of private sector ones. For those who are covered, there are two types: defined benefit and defined contribution.
Up until 1984, most private sector worker who had retirement plans had defined benefit plans. As with Social Security, they and their employers paid contributions into a collective fund out of which their guaranteed retirement incomes were paid. Starting in 1981, however, employers began to increasing replace the traditional pension plans with defined contribution individual savings and investment accounts, which produce much less retirement income.
In 1981, 61.4 percent of private sector workers who had employer-sponsored retirement plans had traditional pension defined benefit ones. Today, only 16.1 percent still have those types of plans.
The most widely known of those plans, which has become a metaphor for the approach, is the 401(k), named after a provision of the Internal Revenue Service code.
Individual savings occupy a very distant third place, except for the rich, as a source of retirement income.
Essentially what has occurred since 1981 with the retirement system of the United States is that Social Security has remained steady while employer-sponsored plans have increasingly shifted from being the form of guaranteed traditional pensions where employers bore the risks of investing to individual savings and investment schemes in which employees now bear the risks. And these individual accounts, while very profitable for the financial services industry, produce much less retirement income than the pension plans they replaced. Therein lies the major cause of the growing retirement crisis in the United States.
From a hemispheric perspective, U.S. workers have suffered the same transformations of their former collective and solidarity-based traditional pension plans to individual investing accounts that render much less income as have about half of Latin American workers, including those in Chile and Mexico, but in a different way. While their national retirement system has yet to be privatized, their employer-sponsored plans have been transformed into the same types of systems as the privatized national systems of Latin America.