What's in YOUR Wallet?

This New York Times article, about a retirement system strikingly similar to the one that Bush is pushing, says some scary things:

Nearly 25 years ago, Chile embarked on a sweeping experiment that has since been emulated, in one way or another, in a score of other countries. Rather than finance pensions through a system to which workers, employers and the government all contributed, millions of people began to pay 10 percent of their salaries to private investment accounts that they controlled.Under the Chilean program - which President Bush has cited as a model for his plans to overhaul Social Security - the promise was that such investments, by helping to spur economic growth and generating higher returns, would deliver monthly pension benefits larger than what the traditional system could offer.

But now that the first generation of workers to depend on the new system is beginning to retire, Chileans are finding that it is falling far short of what was originally advertised under the authoritarian government of Gen. Augusto Pinochet.

Now, to be fair (and its one of the debilitating characteristics of liberals that we do try to be fair), the article says that the problems that Chile is experiencing have two major sources, of which one is likely here, and one is not. The article even makes the point that the investment portion of the equation is actually doing quite well -- better than expected, in fact.

And the problems?

• Exorbitant handling fees on the part of the managers of these private funds, coupled with a strange reluctance to clearly state what those fees might be.

• A large percentage of the working population paid nothing, or very little, into the fund, and so they get very little back. The government, as guarantor of last resort, has to give them supplemental payments that were not anticipated in the original plan.

I can see certain politicians saying that 'Fees are just a normal part of doing business, and the government has no right to interfere with them; as for the other, well, they should have paid in more -- its their fault!'

Tread cautiously, and keep a filled mattress, folks.