President's Social Security Fix Too Risky

As asked by the National Conference of Public Employee Pension Systems (NCPERS), we are writing this to Local 660's Members to offer the respectful opinion that President Bush's plan for fixing Social Security is too risky. These accounts would diminish the Social Security safety net if workers make poor investment decisions, retire during a down market, or outlive their retirement.

Investing in equities, however, is a good idea. State and local government pension plans have invested their funds in equities for years, with an enviable history of success. The National Conference on Public Employee Pension Systems (NCPERS), whose members are the trustees and administrators of pension plans, has developed a five-point proposal ( online at www.NCPERS.org ) for restoring Social Security's long-term financial problems. It includes an investment component, but one much safer than the President's.

NCPERS proposes selecting a new, independent investment board whose members would determine how to invest a portion of the Social Security fund. Following the public pension model, 15% of the Social Security trust fund would be invested in equity market index funds, and 25% in state and local government bonds devoted exclusively to rebuilding the infrastructure of cities, counties and states. Both offer low risk with good returns.

For more than a century public pension plans have been invested following a similar model that resulted in remarkable stability. Their success is due to the use of considerable research and the advice of investment professionals who understand securities and have achieved an average annual return of 8%.

Congress must reject the high-risk proposal to create private accounts. We urge Local 660 Members to contact their Congressional Representatives to slow down and carefully consider alternatives like NCPERS that would offer solvency for the Social Security system and retain current benefits - without increasing payroll taxes on middle and lower income workers or placing workers benefits at risk.