Consider this statement: “The basic idea of social security is a simple one: During working years employees, their employers, and self employed people pay social security contributions which are pooled into special trust funds. When earnings stop or reduced because the worker retires or becomes disabled, monthly cash benefits are paid to replace part of the earnings the family has lost.”
If this statement is true, the present value of the old-age pensions already promised to persons covered by social security is in the billions if not trillions of shillings. That is the size that would be required to justify the statement above.
The impression is given that a worker’s “benefits” are financed by his “contributions.” The fact is that taxes collected from persons at work are used to pay benefits to persons who had retired or to their dependents and survivors. No trust fund in any meaningful sense is being accumulated.
Workers paying taxes today can derive no assurance from trust funds that they will receive benefits when they retire. Any assurance derives solely from the willingness of future taxpayers to impose taxes on themselves to pay for benefits that present taxpayers are promising themselves. This one-sided “compact between the generations,” foisted on generations that cannot give their consent, is a very different thing from a “trust fund.” It is a Ponzi Scheme!
Social security is in no sense an insurance program in which individual payments purchase equivalent actuarial benefits. Social Security is a combination of a particular tax and a particular program of transfer payment – the same way ponzi schemes work.
To make matters worse, if you are over the retirement age and decide to work; you will still have to contribute to social security (benefits that you will obviously not receive!)
So this compulsory tax for all employed people should be called National Ponzi Scheme not National Social Security Fund.
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