I've been to Chile many times. I have many friends who are Chilean. Here's what I can tell you about the system:
The system is about 30 years old. It replaced an old Pay - as - You - Go system, after the overthrow of Pinochet , in 1981. The system is on VERY shaky financial grounds due to
1. High management fees: Almost a third of contributions go to management fees and the net return to workers over the last thirty years has been about 5 % or the same as a bank savings account.
2. Low participation rates: Half of Chilean workers do not participate, including the military, due to the structure of the country's economy.
3. Heavy dependence on an inadequate safety net: The government is obligated to provide subsidies to workers failing to accumulate enough money to earn a minimum pension. Thus, the government pays for all people who can't afford to contribute to a private system or whose private pensions have gone bankrupt or whose investments have failed. But, the government often can't access enough funds leaving retirees with a small fraction of their SS. Often, they receive nothing. Over 41 % of retirees continue to work in Chile because their investment accounts are too small or too infrequent.
4. Prohibitive costs to the government: The transition costs , from the old to the new system , averaged 6.1 % of GDP for the first ten years of transition and are now averaging about 4.5 % of GDP and are expected to continue at that rate for the next 25 + years.
The bottom line ? The old system, in 1980, paid a maximum of $ 1250 per month. To receive that under the new system requires a lifetime contribution of $ 250,000. Only 500 out of 7 MILLION retirees receive this maximum amount.
So, Herman, old friend, be careful what you advocate. Do your homework. Go the Chile ( Not Chilis ). I hope your 9-9-9 plan is better researched than your SS " FIX "
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