Posted on 02/11/2005 12:42:25 PM PST by crushkerry
The phrase guaranteed benefits has been used a lot recently to describe the future benefits under the existing Social Security system. It shouldnt be; benefits under Social Security are not guaranteed.
In 1960, the Supreme Court of the United States in Flemming v. Nestor ruled that you have no legal right to your Social Security benefits. The Court went on to say that your Social Security payroll taxes are just that: a tax, not a "contribution." And your benefits are part of a government spending program, no different in the eyes of the law than corporate welfare or farm subsidies.
Because of the Courts decision in Flemming v. Nestor, Congress can cut your benefits at any time or even eliminate them altogether. Unfortunately, deep cuts in Social Security are not out of the question. "Saving" Social Security without individual accounts could require a 50% increase in Social Security taxes or a 27% cut in benefits.
The only way to guarantee benefits would be through personal retirement accounts. In fact, under the Cato Institutes own plan, The 6.2 Percent Solution, you would be given a recognition bond for the contributions you made under the traditional Social Security system, which the government could never take away. In addition, you would be permitted to invest 6.2 % of your wages your half of your overall Social Security contribution -- into a personal retirement account. The government could never take that away from you either.
Now that is a guarantee.
Patrick Hynes
He is also the proprietor of www.anklebitingpundits.com (formerly www.crushkerry.com)
Ping
May his efforts be blessed.
It's about time! And he forgot to say that the congress can spend the money on other things. It is a hoax to keep talking about a guarantee under these conditions. If the dems would truly represent their constituents, they would be highlighting the poor elderly people trying to get by on $450/mo instead of pretending that status quo is the best we can do.
I myself am embarrassed that I only just realized Canada's version of SS, the Canada Pension Plan is not a pension but merely a payroll tax like Unemployment Insurance
we had an employee just turn 65 and I was trying to find out if we need to keep taking his CPP contribution out of his paycheque when he was continuing to work
sure enough I found no information at the silly government website to answer a simple question but I did see that if you don't apply for CPP and you die in the interim, your estate is not entitled to continue receiving those benefits even if you paid into the system for 40 - 50 years, and even if you do apply and are receiving benefits, they stop on death and all your estate gets is $2500.00 to help bury you......
I mentioned this to my accountant who said yep it's not a pension plan, it's a misnomer and then you realize if you had invested that same amount of money, even conservatively over the last 40 years, know how much money that would be, of course that assumes you are a working stiff whose has a salary to do so......
our own plan is in similar trouble
I've been interested to know though, my sense is the Canadians were ahead of the Americans when it came to Registered Retirement Savings Plans, the equivalent to the 401K's in the US, because they've always known Canada Pension Plan wasn't going to cut it for most Canadians,
I need to research that some day, Canadians also get an Old Age Supplement, everyone gets the same amount, around $300 a month, whoopee, but if you make over so much income a year it gets "clawed" back, CPP benefits of course depend on how much you contributed over your lifetime and cannot be "clawed back"
for example how does the 401 K work today
in Canada, you can put up to 18% of your earned income into an RRSP up to a maximum this year of $16,000 and you receive a tax deduction for that $16,000 against your current income, so you save taxes twice, the initial contribution decreases your taxes for that year and then the money accrues tax free in the plan.....
if you don't use up your maximum in any year, you can carry forward that amount
I doubt that the Supreme Court's language affirming his non-entitlement would, or could, be applied in today's context that have facts disparate from that case. The axiom is true that: "hard cases make bad law." The Nestor case was probably fact driven and would not be binding authority in today's Court.
There's no doubt that Congress can change the terms of the Act's application. But, in my opinion, the substantive entitlement would be upheld by the Court with the Congress being instructed in the concept of invidiousness. It's impossible to predict how the remedy would be shaped, but for sure there would be a remedy that would preserve the underlying benefits.
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