| Change |
SS
Beneficiaries |
Government/
General |
Comments |
| Account
Performance vs. Treasuries |
GOES
BOTH WAYS (likely long term positive) |
NEUTRAL (*possibly positive) |
*to the extent traditional benefits are
offset by account value increases, this could be a positive for
government and negative
for beneficiaries. |
| Residual
Value |
POSITIVE
(potential of residual to pass to heirs) |
NEUTRAL (evens out
actuarially |
No residual can exist if plan requires
purchase of annuity |
Ownership/Control
of Retirement Reserve
|
POSITIVE |
|
Accounts are now akin to private property,
making them harder for government to reduce or eliminate other than
through taxation. However,
Government can
also offset benefits
based on private account performance. The latter is part of
the President's plan. |
| Account
Administration Costs |
NEGATIVE
if paid by beneficiary |
NEGATIVE
if paid by Government |
|
| Risk
of Exceeding Life Expectancy |
NEUTRAL
to group, potentially negative to individuals |
NEUTRAL (evens out
actuarially) |
If amount transferred to
private accounts is actuarial estimate for
life expectancy, individual assumes risk of outliving assets. |
| Deviation
from Plan Actuarial Assumptions |
GOES BOTH WAYS |
GOES BOTH WAYS |
depends on direction of
variation from current assumptions. Assumptions include actuarial
mortality, disability and tax and wage base growth assumptions |
| Government
Borrowing Costs |
GOES BOTH WAYS |
GOES
BOTH WAYS; likely negative |
Difference
between
actual carry (interest) on new debt vs. assumptions in PV calculation
of benefits. There will be a 'real' rate
impact from additional supply of external funded debt. Negative for
stock market, positive for bondholders |
| original
version here.
As of may 6, 2005 4pm |
