For a decade and more, the Right has paraded the privatization of public pensions in Chile and Britain as enormous success stories—examples that America should follow in abandoning traditional Social Security.

At The Century Foundation, over that same period, we have found ourselves part of a minority of analysts who argued, instead, that the changes in those two countries, in fact, have led to serious disappointments: lower pensions than predicted and higher, not lower, public spending.

In the case of Chile, we argued back in 1997 that privatization had hardly been a panacea for the government financing problems which led to the reforms in the first place: "The Chilean government's financial liabilities include large future pension obligations for retirees who participated in the old system, generous guaranteed minimum pensions (85 to 90 percent of the minimum wage), and additional pensions, like those for the military, which have not been privatized. The government has financed some of these costs through a budget surplus but has also borrowed, selling many of the new bonds to the new pension fund managers."

As we recently noted, the transition costs of shifting to a privatized system in Chile averaged 6.1 percent of GDP in the 1980s, 4.8 percent in the 1990s, and are expected to average 4.3 percent from 1999 to 2037. Those costs are far higher than originally projected, in part because the government is obligated to provide subsidies for workers failing to accumulate enough money in their accounts to earn a minimum pension.

Regarding the United Kingdom, we found that privatization has been less of a boon to British pensioners than a bonanza for the private firms who have prospered since the introduction of private accounts there in 1988: "Personal Pensions have lined the pockets of the companies that sell them. The Institute of Actuaries has estimated that fees may consume 10 to 20 percent of a worker's contributions to a Personal Pension plan (compare this to American Social Security's administrative costs of somewhat less than 1 percent of benefits). Using a comprehensive database of the costs charged by insurance companies offering individual accounts in the U.K., three economists conducting research for the World Bank estimate that fees and costs will consume an average of 43 percent of the value of an individual account over the course of a typical, 40-year working career."

In the last week, moreover, articles in the New York Times about Chile, and The American Prospect about Britain have made clear that what we should learn from these privatization examples is to be skeptical of the false promise of a free lunch for retirees. Privatizers trumpet these programs, apparently, either because they are blinded by ideology and theory or because they are confident that the truth will be lost in translation.

Still, as Ronald Reagan once reminded us, "facts are stubborn things."

Richard C. Leone is president of The Century Foundation.