Today’s lede editorial in the Washington Post says the Bush Administratin seems to have learned from three countries that made major mistakes in implementing private personal accounts, the U.K., Chile and Singapore. And, the editorial discusses additional risks as well as possible options open to policy makers. What the editorial needs is a new lede: Social Security personal savings accounts will succeed only if the PSA market is highly regulated, workers are given numerous low-cost investment options, workers are not allowed to touch their money until they retire or die and workers are given strong financial incentives to participate in personal savings accounts, but no one is required to. Impact graphs from the editorial follow:

Social Security reform, in short, is risky. Individual retirement accounts can suffer not only from aggressive salesmen but also from high management fees (Chile), disappointing investment returns (Sweden), irresponsible subsidization at the expense of taxpayers (Britain, again) and the danger that workers might seek early access to their money to meet medical emergencies or other expenses, leaving them impoverished in retirement (Singapore). So, despite the significant likely gains from investing in equities via personal accounts, reform doesn’t cross the threshold of plausibility unless it is designed to avoid these pitfalls.

The Bush administration appears to understand this. It says that workers would not be allowed to tap into their accounts before retirement; nor would they be permitted to borrow against them. Moreover, it has proposed a government-run personal account system, modeled on the Thrift Savings Plan for federal employees. The government, not private salesmen, would offer workers the option of a personal account, along with a short list of mutual funds to invest in. By cutting out private-sector marketing and advertising costs, the Bush plan would keep fees low—to less than 0.3 percent of the savings in the system.

The administration also seems to want to avoid subsidizing private accounts, even though a subsidy might sweeten them politically. Under Mr. Bush’s proposal, workers who opt to divert some of their payroll taxes into a private account must give up future government benefits worth the same amount, suggesting no taxpayer subsidy. However, it would still be true that account holders who die before retirement would be able to bequeath their savings; this would represent a “leak” of money from the system, which taxpayers would be required to plug.

The Post also worries that those who invest wisely make so much money that they will give up traditional SS benefits and will no longer support the program.

People who can retire comfortably without Social Security benefits today don’t support the program, and they are the ones who want SS reforms and expanded personal savings accounts (above and beyond IRAs, 401ks and HSAs) the most.