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Comment by skybrian | Hacker News Reader

This article is useful for showing how some workers can get screwed in the transition from a pension to a defined contribution plan.

I don't think it's sound on social security. Something needs to happen and nobody really knows how the political system will react. But it seems like the most likely scenario is some combination of deficit spending and more taxes, because cutting benefits is politically untouchable.

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It seems nonsensical that American pensions are payed for directly by employers. In the Netherlands, and I think most of europe, pensions are payed out by special and legally separate funds. These are tightly regulated, and in return are fiscally advantageous.

Now, there is some link between a pension fund and the corresponding company, so a downturn in the company can still hit your pension. However, the company does not get to set the pension conditions. Hence they cannot lure people with great but unrealistic pensions and later cut those pensions.

Nothing is politically untouchable. Someone just need to pay enough to make it worthwhile. That may not happen with social security because the "lobbyists" don't care about it. SS is money owed to the people, and they already spent it. When government spending needs to be significantly cut back to pay SS then there will be incentives to touch it.

The cap on taxable SSI wages went up 7% in 2017 and no one really noticed or complained. It's a relatively progressive way to keep things funded. I don't see why we'd need to do much else.

Currently, only 8% of wage earners are over the $128400 social security maximum.

https://dqydj.com/income-percentile-calculator/

The social security tax is actually regressive to an extent. If you make between $82500 and $128400 your marginal tax rate is higher than someone making between $128400 and $157500. So there is that.

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