Chapter 3: Alternatives to Social Security

Abstract

The Commission recognizes the importance of such private arrange­ ments and regards them and other forms of private savings as essential supplements to Social Security. It is not persuaded, however, that they could be used as an acceptable substitute. The primary difficulty with reliance on voluntary savings is that too many people not only will not-save, but also do not have an institutional basis for saving. It is not surprising that families hard pressed for funds to cover current needs--and seeing little prospect that monies put aside now will retain their value many years hence--choose to spend their money now. The growth in private insurance has come through employee benefit plans developed by employers or unions. Such plans are not readily available, how-ever, to significant segments of the labor force, especially those who work for firms whose work force, revenues, and assets are . small. About half of all workers in private non-agricultural employ­ ment are now covered by private pension plans. The growth in such plans was rapid from 1940 to 1960 but has since tapered off.