One way that surging GOP presidential candidate Herman Cain has distinguished himself from his rivals is by calling for an alternative to Social Security — a private retirement plan modeled on one instituted a generation ago in Chile.
"Chile — they had the same problem nearly 30 years ago," Cain said last month at a forum in Florida, one of several occasions where he's touted his proposal. "They went to an optional, personal retirement account approach, and they now have individual retirement accounts for their workers."
But there's nothing optional about Chile's system. It requires that all workers contribute 10 percent of their salaries to private pension plans, plus other fees for insurance. These private funds have grown by an average of 9 percent annually after inflation since 1981, creating wealth that has boosted Chile's economy.
Still, many Chileans are unhappy over the funds' commissions and fees, and frustrated that their pensions aren't bigger. Polls have found that if given the choice, most Chileans would rather decide for themselves how to invest for their retirement.
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