Thursday, November 13, 2008

Four actuaries take on the Social Security problem

Contingencies, a magazine for the actuarial profession published by the Academy of Actuaries, solicited input from four professional actuaries regarding how they would fix Social Security. They are:

  • Thomas S. Terry, the Academy of Actuaries' vice president for pension issues and CEO, JP Morgan Compensation and Benefit Strategies.
  • Anna Rappaport, chairperson of the Society of Actuaries Committee on Post-Retirement Risks, a senior fellow on pensions and retirement for the Conference Board, and a past president of the SOA. S he is president of Anna Rappaport Consulting in Chicago.
  • Ken Buffin, a former chairperson of the Academy's Social Insurance Committee and a principal in Buffin Partners in Sparta, N.J.
  • Haeworth Robertson, chief actuary of the Social Security Administration from 1975 to 1978. He is the 2004 recipient of the Academy's Robert J. Myers Public Service Award.

The whole article is well worth a read.

Update: Here's something I think is worth pointing out: three of the four actuaries propose a universal flat Social Security benefit paid to all seniors, regardless of their prior earnings or labor force participation. This is interesting given that Social Security benefits have always been tied to work and taxes paid. The idea they're proposing is similar to so-called "universal pensions" such as those in New Zealand. These universal pensions would be supplemented with an earnings-based second level benefit. I've done some work in this area which should be forthcoming over the next month or so; there are pros and cons to universal pensions and it would constitute a big shift from Social Security's traditional approach, but they would also address some shortcomings to the current method of providing retirement income security.

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