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The notion of generational equity or the privatization of the social security system could have a profound impact on corporations and their approach to employee benefits. Though I’ve posted both proponet views and advocate views flat out labeled, “Generational Equity Scam”, I think it is important take a non-biased look at the complications that the notion of generational equity could present for US businesses of all size.

Here is my top list for consideration:

• Benefits are at risk. With workers contributing to IRAs, retirement benefits could be reduced as much as 30 percent.
• Creating private accounts would make Social Security’s financing problem worse. The rates of what is needed versus what will be available with time considerations for social security would mean that the private sector would have to lend to the government almost immediately in order to be able to fund retirees. These pressures would be added to a corporate financing climate that is already cash strapped.
• Administrative costs will increase. With the increase of administrative costs, the outstanding sums would have to be paid for somehow. This could lead to the reduction of benefits, retirement age raise or the increase of the payroll tax. That last one is key to corporations as increased payroll taxes almost instantaneously equates to a reduction in work force.
• Survivors and those with disabilities are at risk. Privatization proposals do not take them into consideration. Their benefits are either cut drastically or there is no plan to raise the additional funds needed to keep up their benefits. For corporations that currently provide survivor benefits, their entire compensation packages could be impacted as these types of plans almost disappear from affordability.

Leaning on corporate america is not a smart approach for America at this time in our economy and the future of our country. We need to solve for our social security problem. . .not pawn it off to the private sector.