Archer/Shaw Social Security Guarantee Plan and Concerns of Younger Workers

[Persyko <alpersyko@earthlink.net>]

Upon reviewing Rep. Shaw's proposal it would appear that highly 
compensated workers who are already likely to be covered by private 
retirement plans would benefit the most from these tax credits.

According to testimony by Donald Lubick, Assistant Secretary for Tax 
Policy, before the Subcommittee on Oversight, of the House Committee 
on Ways and Means on Pension Issues lower-wage workers are far less 
likely to be covered by a pension plan than higher income individuals.  
"Over 80 percent of individuals with earnings over $50,000 a year are 
covered by an employer retirement plan.  In marked contrast, fewer 
than 40 percent of individuals with incomes under $25,000 are covered 
by an employer retirement plan.  In addition, the qualified plan rules 
do not require coverage of many part-time workers.  While private 
pension coverage continues to grow, half of all American workers--more 
than 50 million people--have no pension plan at all.  The bulk of the 
uncovered workers fall into one of three overlapping categories: lower 
wage workers, employees of small business, and women."  At the same 
hearing Ms. Carol Sears, President of the American Society of Pension 
Actuaries, warned that "even if the Social Security system remains 
strong through the 21st century, it will not be enough.  Income from 
Social Security represents less than half of what the average American 
needs to retire comfortably."

As I discussed in my earlier posting on May 27th (which unfortunately 
was mis-labeled "What 10" and which should have been titled "Private 
Retirement Funding Questions") workers should be given more 
opportunity to increase/maximize their private retirement funding 
opportunities.  Additionally, if workers are going to participate in 
retirement funding/investment decisions they need to receive adequate 
non-partisan information and education to allow them to make informed 
decisions.  If younger workers are given an opportunity to participate 
in selection of investment options within defined contribution plans 
and/or are allowed, if not covered, to contribute to an IRA at the
same pre-tax level as 401(k) participants they could significantly 
improve their retirement funding possibilities and there would be no 
need to feel the pressure to "opt out" of Social Security in order to 
accumulate sufficient retirement savings. 

As I have not received a response to the questions in my May 27th 
posting I would appreciate any thoughts or criticisms.  Thank you for 
the opportunity to participate in such an interesting discussion.

Luita Persyko

[Moderator's Note:  The erroneous title has been corrected in
the message archive.]