Today, more than 5 million American workers have opted out of the Social Security system, participating instead in plans administered by local and municipal governments.
President Bush visited Galveston recently to highlight the success of these plans. San Diego's Supplemental Pension Savings Plan, established in 1981, is among the best of these plans, allowing employees to contribute between three and six percent of their salaries to their retirement accounts. The City of San Diego matches employee contributions, and permits employees to choose among a range of investments with different levels of risk.
By 2000, the average worker in San Diego's SPSP program would have been eligible for three times the benefits of a worker who had remained in the traditional Social Security system.
Unfortunately in 1983, Congress eliminated the provision allowing localities and municipalities to opt out of Social Security. But San Diego's example helps demonstrate the power of individual accounts to make people better off.