Asset allocation under partial and complete privatization of social security contributions
Social Security reform has focused on allowing individuals to choose where to invest a portion of their retirement contributions as a means of avoiding insolvency of the retirement system. Chilean reforms in the early 1980s have demonstrated, at least for a developing and immature stock market, that privatization can be an effective way to increase returns on retirement savings. Mature security markets in the United States provide a large variety of potential investments that appear to be attractive alternatives to the Social Security trust fund's implied rate return of 2.3%. These returns have a zero variance, which still makes them a good choice when compared to more volatile alternatives in the event of full or partial privatization of Social Security contributions assuming assets are allocated according to mean variance efficiency analysis.
Journal of Financial Services Research
Tucker, Michael, "Asset allocation under partial and complete privatization of social security contributions" (1998). Business Faculty Publications. 11.
Tucker, M. (1998). Asset allocation under partial and complete privatization of social security contributions. Journal of Financial Services Research, 14(1), 5-16. DOI: 10.1023/A:1008062701529