Retirement programs

So, here I am enjoying a family reunion with the Lemieux clan in the  south of France and, of course, the politics of today are much discussed.

Yesterday, the subject du jour was retirement plans. My cousin, an international business exec, explained how the French retirement system operated in general terms. People pay into their retirement system and become fully vested at 42 years of employment (there are adjustments for unemployment, type of job, etc.). If fully vested, they get paid 55% of the average of their last 10 years of salary as a retirement pension. If they opt to retire early, they lose 5% of their retirement package for every year short of 42 years “de service”. The bad news, however, is that they pay 23% of the salary for retirement, medical and unemployment insurance for these benefits. How many American would accept that, I really don’t know. I suppose it would depend upon what type of guarantees come with.

I ask my cousin, “but, your retirement programs…are they solvent?

Yes, he explains. Because monies are placed directly in quasi-private, government-regulated funds that invest the funds and manage the payouts.

That’s not like us, I say. In the U.S., the governments collects all social security and medical insurance payments into a general fund and…

“…they stole it, right?”, he finished my sentence.

Yup!

The big omission in our debates about social security and medicare reform is that there are many successful models out there for us to emulate. Not just France (in my humble opinion…although I would trade a lower FICA for a lower payout, as I prefer to manage my own investments) but also Chile (which was designed by Nobel-prize winning economists of the University of Chicago), Switzerland and other countries. GW Bush tried to introduce a plan similar to Chile’s highly successful plan and got ridiculed and excoriated by the Democrats and their lapdog media for it. Unfortunately, too many of our American populace preferred to focus on the ridicule rather the details of the plan, thanks to the media chaff generated Democrat Left. Nobody had a clue as to what it was they were ridiculing. Ditto with regard to what Rep. Paul Ryan proposed.

The solutions to our retirement crisis are out there.

It’s just that nobody can see them through the clutter of media chaff and, for far too many voters, the deep, enveloping shadows of their posterior orifices.

For anybody that is interested in the details of other countries’ retirement programs, here’s link that describes the Swiss system:

http://www.heritage.org/research/lecture/hl672-switzerlands-national-retirement-approach

And, here, the Chilean system:

http://en.wikipedia.org/wiki/Chile_pension_system