Greenspan Gives Qualified Support To Social Security Private Accounts
Federal Reserve Board Chairman Alan Greenspan last week gave qualified support to Bush administration proposals to create so-called “private investment accounts” in the Social Security program.
In his comments on Social Security in testimony before the Senate Banking Committee, Greenspan said private accounts “would be a good thing to do.” But he suggested Congress should “start out slowly” and cautioned that the trillions of dollars in additional federal borrowing that will be necessary to fund the change should be in the forefront in considering whether such a program should be implemented.
“If youre going to move to private accounts, which I approve of, I think you have to do it in a cautious, gradual way,” he said.
While legislation implementing such a program has not been introduced, or even reduced to principles provided by the White House, Bush administration officials have told reporters they envision basing the program on the federal thrift accounts now available to federal employees through their retirement programs. That system provides basic options of growth, bond and mixed accounts and is currently administered by Barclays Bank at a fee of 60 basis points annually.
In a briefing before the Presidents State of the Union message, presidential advisors also said they envision the program including another component of the federal thrift program where government employees can purchase an annuity that provides the opportunity for additional income after retirement. That program is currently managed by Metropolitan Life Insurance Company.
The insurance industry has yet to announce whether it supports creation of private investment accounts in Social Security, according to Jack Dolan, a spokesman for the American Council of Life Insurers. At the same time, he said, “We believe that if Congress embraces the concept of personal accounts, then a substantial portion of assets in these accounts should be annuitized and then payable over the retirees lifetime.”
Reproduced from National Underwriter Edition, February 18, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.