Are there privatization models we can look to for guidance before jumping into a plan to overhaul the Social Security system, as the president proposes? In fact, there are. Chile, Argentina and Britain are three countries with tales to tell.

While more than 99 percent of our country’s Social Security revenue goes toward benefits, with administrative fees at less than 1 percent, in Chile the administrative fees run as high as 20 percent. The reforms in Chile have yet to produce the promise of lower government spending. Instead, according to a U.S. Federal Reserve study, two decades into reform the Chilean government is pouring in money to “provide subsidies for workers failing to accumulate enough capital to provide a minimum pension.”

And pension reform was a major reason for Argentina’s rapid buildup of debt in the 1990s. The decision to switch to private accounts that had to be financed with government borrowing, rather than taxes, resulted in the nation’s worst economic crisis ever.

Margaret Thatcher’s private pension scheme in the United Kingdom suffered from high fees levied on private accounts, so much so that the government had to impose a “charge cap” on investment companies. Even so, fees continue to take a big bite out of British retirement savings.

The British Pensions Commission warns, “Reductions in yield resulting from providers’ charges can absorb 20 [percent] to 30 percent of an individual’s pension savings. … Those who think Mrs. Thatcher’s privatization solved the pension problem are living in a ‘fool’s paradise.’”

—D.K.