Plan should be modeled after that of members of Congress, federal employees
Washington, DC - The nation's most successful social safety net faces a $3.7 trillion shortfall and without serious changes will have to slash benefits by up to one-third for future generations of retirees. That stark reality was the focus of a House Ways and Means Committee hearing today at which U.S. Rep. Dave Camp (R-Midland), a senior member of the committee, pressed Comptroller General David Walker on adding to Social Security personal savings accounts like those offered to members of Congress and federal employees.
"The Thrift Savings Plan has been a huge success," said Camp. "It is a carefully managed program with high participation rates and very low administrative costs which have yielded solid returns on investments. Wouldn't adding a voluntary savings account modeled on the TSP strengthen the current system?"
"The federal Thrift Savings Plan model has worked and it is one you may want to look to as a possible example," Walker responded. "Secondly, less than 50% of the private sector workforce has a pension plan, and an individual account plan [modeled on TSP] could provide the mechanism by which Americans who do not have a private pension plan could save on a payroll deduction basis, gain economies of scale, gain limited investment options and gain some investment education to help them plan, save and invest in the economy."
The ten year average rate of return for the TSP is 7.6%. Social Security, under current law, has a 1.8% rate of return.