Thursday, August 24, 2006

Five million state/local government workers reap rewards outside Social Security

I'm linking to an old Cato ;paper on Social Security from 1999:
Approximately five million state and local employees are exempt from Social Security and instead participate in retirement plans administered on the state and local levels. The history of those retirement plans provides valuable information for policymakers attempting to reform the federal program.

State and local retirement plans generally provide plan participants with more benefits and greater flexibility over retirement age and plan payout than does Social Security. Those state and local plans can provide superior benefits because they predominantly "prefund" future benefits, either by saving and investing the program's income or by allowing the participants to save and invest their contributions in accounts that will provide for their own future benefits. Prefunding also provides security for future retirees: while Social Security is facing a severe shortfall in revenue, most state and local plans are fiscally sound and, in many cases, thriving.
That's a lot of people who aren't part of the foundation of the welfare state.These must be special people that grease Congress to stay out of the system.We have a question for those who are for Social Security or the status quo in SSI: if Social Security is so darn great why isn't the whole workforce in it? Also,why can't individuals opt out since these government workers never opted in the system? No one seems to have answered these questions.