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In This Issue April 2005 Vol. 13 No.4 OSARC newsletter In This Issue 2 - May Meeting Details - Privatization’s Foreign Failures 3 - Action Needed on Drug Price Information 4 - Labor History Month - Onassis Ctr. Trip Report OSARC at the NYC Transit Museum 5 - June OSARC Luncheon Twenty-five OSARC members and friends visited the New York City Transit - Nominations Close 5/11 Museum in Brooklyn Heights on April 13. See the story on page 6. - Cats of a Gray Color - Why Join NYCARA? FUZZY MATH - State of Older America n the ongoing effort by the Bush Administration and its allies to sell its Iprivatization proposals for Social Security, one element that is often overlooked is the way the proponents of privatization “cook the books” in 6 -OSARC Underground support of their proposal. On the one hand, their projections of annual returns on private accounts are often in the region of eight or nine percent – historically average returns. At the same time, the projections by the Social Security 7 - Ellis Island May 18th trustees for economic growth over the same period – on which privatizers rely - Thanks OSARCers! for their dire Social Security scenarios – are very low. The same economy that could generate stock market returns of eight to nine percent a year – in other words a robust, growing economy – would generate sufficient Social Security taxes to forestall any shortfall [continues on page 4] È È È È È È È OSARC Next Organization of Staff Analysts rd Retirees Club Meeting 220 East 23 Street Suite 707 New York NY 10010 Wednesday • May 11, 2005 • 12:30–2:30 pm (212) 686-1229 rd (212) 686-1231 Fax OSA Office • 220 East 23 Street •Suite 709 (212) 330-8833 Hotline www.osaunion.org Guest Speaker: Brenda Torres Therapeutic Recreational Therapist Coordinator Center for Nursing and Rehabilitation OSARC Officers 2004-2005 A Model for the United States? Co-Chair........................................................................................Mary Hillman Social Security Privatization Failed in Britain and Chile Co-Chair.............................................................................................Allan Rose by Lawrence J. Kaplan, Ph.D., Professor Emeritus of Economics, Co-Vice-Chair...................................................................................Trudy Stone John Jay College of Criminal Justice, The City University of New Co-Vice-Chair................................................................................Sallie Stroman York and Chair Emeritus, COMRO Co-Vice-Chair....................................................................................Ana T. Vives If it's true that experience is the best teacher, it might be Treasurer.......................................................................................Louis Starkey wise, before considering any radical changes in our Social Secretary......................................................................................Barbara Jones Security system, to review what has happened in other countries. É É É É In 1984, with Margaret Newsletter Editor............Rob Spencer Thatcher as Prime Minister, the British government ini- tiated its privatization pro- gram, substituting private We’ll Be Seeing You in All the Old Familiar Places A total of sixteen (16) members and friends took part in investment accounts for the March OSARC trip to the Onassis Cultural Center, part of its state retirement among them: benefits. Although hopes Renee Bash, Joan Doheny, Richard Fink, Manny for the program were high, Friedman, Fred Frost, Mary Hillman, Rosanne Levitt, the passage of time did not fulfill the promise. Maureen McMahon, Dan Morgan, Allan Rose, Risa Puld, Starting in 2002, many British insurance companies Stacey Rindler, Louis Starkey, Sallie Stroman, Hattie recognized that holders of its private investment accounts Thomas. reached retirement with funds that were much smaller than A total of twenty-five (25) members and friends took what they had expected. The companies began to encourage part in the April OSARC trip to the NYC Transit Museum: their clients to return to the state pension system. Sallie Stroman, Dan Morgan, Betty Henderson, Britain's Pensions Commission warned that at least 75 Beverly Freierman, Nilsa Mangual, Fred Ranzoni, Rev. percent of those with private investment accounts would not Kaye Lee, Edna Riley, Ana Vives, Margaret Williams, have enough savings to provide an adequate pension in Herb Wasserman, Rosanne Levitt, Inez Lambert, Trudy retirement. Fees and commissions alone reduced accumu- Stone, Renee Bash, Stacey Rindler, Hattie Thomas, Mary lated nest eggs by as much as 20 to 30 percent. Hillman, Richard Kucera and his wife, Richard Fink, An excellent article titled "A Bloody Mess" by Norma Elizabeth Borden, Avis Joseph, Louis Starkey and Allen Cohen, a senior corporate reporter for The Financial Times, Rose. appeared in The American Prospect of January 2005. The We hope to see you at our next meeting. author pointed out that in 2004 the British Department of Work and Pensions reported that 500,000 people in Britain had abandoned private pension plans and moved back into • • • • • the state system. British actuaries expect another 250,000 will return to the state plan in 2005. Nursing & Day Care the Subject of May OSARC Meeting When the private system started, British citizens were OSARC’s May meeting will feature guest speaker urged to substitute private savings accounts for a portion of Brenda Torres, a Therapeutic Recreational Therapist their state benefits. Companies guilty of mis-selling" were Coordinator at the Center for Nursing and Rehabilitation in Brooklyn. Ms. Torres will speak on at-home nursing care, daycare for seniors, and exercise for the senior population. The Center for Nursing and Rehabilitation is part of a not-for-profit healthcare network established more than two decades ago that focuses on chronic diseases suffered by minority communities and the poor. The Center is a 320 bed skilled nursing facility and the first in NYC organized on the “neighborhood” model which focuses on “resident prefer- ences rather than management convenience.” The “neigh- borhood” includes social workers, recreational therapists and nurses, as well as residents, who participate in decisions about how the “neighborhood” is run. The Center includes an accredited short term in-patient rehabilitation and subacute OSARCers and friends at the Onassis Cultural Center on care program. The network also includes adult day health March 23rd (standing l to r) Manny Friedman, Dan Morgan, care programs, in-home hospice care and in-home nursing. Sallie Stroman, Allan Rose, an Onassis Center staffer, Stacey Rindler, Risa Puld, Hattie Thomas (seated left to right) Renee Bash, Maureen McMahon, Rosanne Levitt, • • • • • Joan Doheny, Madeline Taylor, Fred Frost, Richard Fink. OSARC Newsletter •April 2005 • Page 2 percent of them would opt to go back to the old system." What went wrong? One recipient, who believed in the promises made in 1981, explained that fees and commissions soaked up as much as a third of what he expected to receive. Those who had remained in the state system, at retirement, were receiving almost twice as much and that amount was guaranteed for life. An advisor in the recipient's private pension fund told him that his nearly 24 years of contributions would finance a 20-year annuity paying only $315 a month. Others who stayed in the government system are retiring at almost $700 a month, guaranteed for life. The recipient could live Tapestries by Greek artist Artemis in her series “Odyssey” comfortably on his salary of $950 a month, but if he retired – including The Resourceful Man (1998) above – were on on his private pension, he would be reduced to poverty. display in March, as OSARC visited the Onassis Cultural Center in midtown. The maximum retirement benefit for those who remained in Chile's original pay-as-you-go system is about $1,250 a eventually forced to pay about $20 billion in compensation. month. Chilean actuaries estimate that to get that same Ms. Cohen states: "A simple explanation of what went amount from a private pension fund, workers would have to wrong is that the costs and risks of running private invest- contribute more than $250,000 over their working careers, a ment accounts outweigh the value of the returns they are target that has been likely to earn." The United Kingdom spent substantial reached by fewer taxpayer money on advertising to expedite the transfer. than 500 of the pri- Many in Britain, including those who had supported the vate system's 7 mil- concept of private investment accounts, recognize that the lion past and present savings of those reaching retirement age would not protect contributors. In them from a life of poverty in retirement. The British agree short, Chileans are that the U.S. Social Security program seems to offer the best finding that their sys- model. The Chief Executive of the British National Associa- tem is falling short of tion of Pension Funds (NAPF), Christine Famish, notes, "it what was originally (the government) doesn't have to make a profit and it delivers advertised. efficiencies of scale that most companies would die for." Among the ad- The irrepressible Richard Fink, who Another country that has experimented with private mirers of the private arranged the Onassis Center trip, is accounts and, like Britain, has found that the reality does not system in Chile is repressed by Mary Hillman. live up to the promise, is Chile. Nearly 25 years ago, Chile President Bush, who
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