A peek into your future
States' Private Pensions Make a Weak Showing
The retirement accounts have had less appeal and spottier success than Bush plan's projections.
By Peter G. Gosselin
Times Staff Writer
February 22, 2005
WASHINGTON President Bush believes Americans are so eager to join the "ownership society" that, given a chance, two-thirds of those eligible would divert funds from Social Security into the personal investment accounts he proposes.
But when public employees in seven states were offered the opportunity for similar accounts during the last decade, nowhere near two-thirds signed up for them. In many instances, the figure was closer to 5%.
Bush has argued in campaign-style events from Fargo, N.D., to Blue Bell, Pa., that Social Security account holders could make more money for retirement on their own than they can count on from the New Deal-era fixed-benefit program.
But when Nebraska's state and county workers were given do-it-yourself accounts, they made so many investment errors that they ended up making less than colleagues with fixed-benefit pensions and less than what analysts have said is needed for old age. Their poor performance led the Nebraska Legislature two years ago to junk the accounts for new employees.
While Americans are just beginning to grapple with the president's proposal for private accounts, employees and retirement officials in Michigan, Montana, Washington, West Virginia and other states have discovered that the accounts can fall far short of their promise. Their experiences sound a cautionary note for Bush as well as for California Gov. Arnold Schwarzenegger, who has proposed switching public employees to private accounts starting in 2007.
