As part of the current plan for social security to assist those who are in need of assistance, public authorities collect funds through taxes from mostly the sale of goods and services, corporate profits, and individual revenues to be spent on, for example, unemployment or invalidity benefits. But the drawback of this system is known: inefficiencies.

Therefore, Gw suggests the creation of a modern Individual Pension Fund (IPF) system regulated and controlled by a light public administration, the Social Refund Service (SRS), and co-managed by private banks. The IPF system increases people's autonomy to the point of non-reliance on external sources of income such as wages or social security. The creation of an IPF system means that the current Social Security system slowly converts into the SRS which objective is to re-direct public funds originally meant for social security to the IPFs of reliant workers and employees, or people who depend on external sources of income to make their living.

The IPF system, born from gw's principles of Developmental Economics, seeks to free individuals from state assistance. IPFs are held by individuals from birth to death and gather funds from inheritance, personal savings, corporate and state contributions. A predefined minimum value of IPF - Refund Limit (RL) -, one that can generate conservative earnings - Minimum Target Revenue (MTR) - on capital investments and insure non-reliance, determines a voluntary age of retirement. Personal ownership of the fund is only defined by the share of collected funds from inheritance and personal savings which in the typical case illustrated below accounts for about 35 percent:

Corporate contributions represent a share of reliant workers' wages, approximately 10 percent. Non-reliant employees, or people whose IPF have reached RL of about USD 1'500'000, do not benefit of corporate contributions. Instead, these contributions are re-directed to IPFs of reliant residents. Non-reliant residents, that is, people with an IPF above RL or the minimum required to voluntarily retire, may only further raise the value of their funds through inheritance and personal savings.

As a national priority, the IPF scheme foresees a rapid growth of IPFs from reliant residents. The sources of public fundings are from the re-allocation of corportate contributions to pensions of non-reliant employees. The main source of funding for the SRS should come from a Financial Transaction Tax (FTT) - Read IPD February 14, 2010 -. Other sources may include the Social Security system - see diagram below -, that could substantially increase over time as people reach a phase of non-reliance. Cuts in public spendings whenever possible should also be explored as a source of SRS funding - look at Military Alliances: stability and cost-saving opportunities. Over time, IPFs of reliant residents could be financed through the share of public ownership in IPFs of deceased beneficiaries. The role of the SRS could turn into one of a public investment institution.

Below is an illustration of public spending per capita on social security in various countries. The illustration tells how fast IPFs could grow and reach a RL of USD 1.5 million, if only the share of public spending on social security were saved and used as investments, instead of as expenditures.

The diagram above is based on surveys of social security spending in various countries from the years 1992 to 1998 - statistics are provided at the bottom in Data -. In Sweden, for example, yearly spending per capita is USD 9'700 as compared to USD 3'915 in the US and USD 3'120 in Spain. The Social Refund service could redirect these sums - among other sources - on a yearly basis to residents living in these countries from birth to adulthood for as long as the RL of given residents is not reached. At age 20, assuming a yearly return on capital of 5 percent, a resident in Switzerland would hold an IPF of USD 193'545 (USD 708'375 at age 40) thanks exclusively to refunds from social security spending. Not quiet enough to retire. Supposing contribution from FTTs, personal savings, inheritance, corporate and other sources of public revenues and savings were added, RL could be reached much sooner. Look at Steps to SRS to know how to get there.

The following statistics on Population and Social Security were gathered from various surveys corresponding to the years 1992 to 1996. References.