Jump to content
House Price Crash Forum

Bush Proposes "serps Opt Out" Look-alike


Recommended Posts

Bush is proposing to reform the US pension system. I'd be very interested in any opinions people have concerning:

a ) the desirability;

b ) the likelihood of it happening;

c ) the probable outcome.

The basics of the reforms are:

- Allow younger taxpayers to divert some money they pay in taxes to their own investment accounts

- Government would cut guaranteed retirement to those taxpayers

- Bush argues that this will close looming gap between amount put aside for pensions and what will be needed as investments will outperform government assets

- Government will still have to pay at least $2 trillion in “transition costs†in the first decade

Bush gamble on pensions echoes his Iraq strategy, TimesOnline, January 13, 2005

With respect to c ) I can't help but draw parallels to Thatcher's reform of pensions in 1988 when she allowed employees to contract out of the State Earnings Related Pension Scheme (SERPS). This meant people paying into an occupational pension scheme could put the money that would normally go towards their state earnings related pension into their private occupational pension.

It was great news for the city (who picked up huge amounts of money management business), and pension pot wise, great news for investors : the huge influx of money pushed the index of leading shares 350% over the next 11 years, or a compounded annual rate of 12% - even without dividends reinvested!

This performance was also bolstered by pensions mis-selling, where, in a separate part of the reform, employees transfered money from company pensions with defined benefits to private pensions with benefits dependent on the market.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Recently Browsing   0 members

    • No registered users viewing this page.

  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.