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Cost, Speed at Crux of Social Security Debate
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"We've talked about it a lot," said William "Denny" Dennis Jr., an NFIB senior research fellow. "If this moves forward, this will be a key issue for us."
Cost may also drive the decision. A 2001 Social Security Administration paper analyzed a no-frills plan and one with a higher level of service, finding start-up costs ranging from $1.2 billion to $2.3 billion, and annual operational costs at $700 million for the low-end plan and $3 billion for the more responsive system. Kelly A. Olsen, one of the study's authors, said those high-cost estimates probably understate the true price.
The SSA study also estimated that the low-cost system would require 7,735 additional employees to operate it, while the high-cost version would take 33,630 new workers.
Given financial constraints and the political clout of small businesses, Congress may have little choice in how accounts would be structured.
"It's a given that we will collect [contribution data] once a year," Thompson said. "The employer community would go bananas if you told them they had to collect and disburse this money once a month."
Large employers with established, electronic 401(k) systems could be allowed to piggyback personal accounts onto those private plans, suggested Dallas Salisbury, president of the Employee Benefit Research Institute. But more than 85 percent of the nation's 5.6 million small-business employers offer no such plans. That could lead to a two-tiered accounts system.
"If you work for GM, in a matter of weeks, your contributions could be credited to your account," he said, "but for Joe Shoeshine Stand, it could be somewhere within two years."
And that would raise new questions over equity and fairness, said Virginia P. Reno, vice president for income security policy at the National Academy of Social Insurance. "How do you achieve your [policy] purpose if the size of employer determines real eligibility?" she asked.
