Social Security Around the World

As U.S. Considers Private Accounts, Experiences in Chile and Britain Provide Some Inspiration and Offer Cautionary Tales

As Congress considers including voluntary private accounts as part of Social Security, it will not be treading on virgin territory. More than a dozen nations have converted their traditional, government-financed pension systems to programs that are at least partially financed through personal accounts invested in the private sector. For a sense of how private accounts have worked overseas, The Washington Post has focused on two countries, Chile and Britain, whose experiences with private accounts have proved to be both a model and a cautionary tale for the Bush administration. In Chile, the switch to private accounts has given participants a sense of ownership of their retirement fortunes. However, many Chileans who transitioned out of the old system received inadequate pensions, leaving retirees dissatisfied and the government worried about its fiscal future. In Britain, surging management fees for private accounts turned into a political scandal, and many contributors were left worse off than if they had stayed with the state system. Bush administration officials have studied those experiences and the lessons learned have already influenced the White House's personal accounts proposal. And many experts warn that the fruits of personal accounts should not be overpromised. -Jonathan Weisman

Social Security Around the World

SOURCE: Social Security Administration | RESEARCH BY KAREN YOURISH, GRAPHIC BY LAURA STANTON-THE WASHINGTON POST


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