Can U.S. be as bold as..... Sweden?

[National Dialogue Moderator <moderator>]

	Can U.S. be as bold as..... Sweden?  

As we approach the end of this forum, I'll leave you to ponder what the 
Swedes have done to reform their social security system.  No, they haven't 
gone the route of pumping up their trust funds with government IOUs to be 
made good by future taxpayers, as President Clinton and some others have 
proposed.  Nor have they gone the Chilean route, moving to full-scale 
personal accounts designed to replace their retirement program and provide 
for private disability and life insurance too.  They have, however, already 
accomplished what President Clinton--and apparently a fair number of members 
of Congress--feel is either too bold ("radical") for, or quite unnecessary 
in, the United States.  Sweden has already adopted and is now implementing a 
law whereby workers will invest 2.5% of the payroll tax in private, 
self-directed investment accounts.  Workers will select the fund of their 
choice--any fund (whether operated by Swedish companies or international 
companies) that is licensed to do business in Sweden and registers with the 
government to manage personal account funds.  No onerous fee caps.  No 
portfolio restrictions.  No rate of return guarantees.  Flexible 
retirement/withdrawal options.  In short, none of the "necessary 
complications" opponents of personal accounts tell us would be necessary in 
the United States, where we have financial markets that rival any in the 
world and where a large segment of the working population is already 
experienced with investing either directly or indirectly through their 
company pension funds.  Sweden has adopted an administrative structure that 
involves a larger role for government than I believe is necessary or 
appropriate (similar to the Thrift Saving Plan for federal employees), but 
this is of secondary importance to the fact that they have given workers the 
opportunity to build real owned wealth through their social security program.

Sweden also has revamped its basic retirement program, making benefits 
strictly proportional to lifetime earnings and adjusting those benefits to 
reflect an interest factor, similar to the way a defined contribution plan 
works but without the assets (or private ownership).  When a worker reaches 
retirement, benefits will be adjusted to reflect the life expectancy of his 
or her cohort, similar to the way private annuities work--if life expectancy 
has risen, monthly benefits will be reduced to keep lifetime benefits roughly 
the same.  Projected benefit and tax costs have been reduced significantly.   

Our policy makers should aspire to be so bold!


Carolyn Weaver