Ok , so we all know the population growth isn't there, and the pension ponzis as we know them are in trouble.
But no politician will ever be the one to cut it, even autocrats like Putin are careful when fucking with the pension age. It's the grey third rail.
But let's pretend that the EU, UK, and US have recruited SNs top econ stackers and said, how can we reform this beast without fucking the pensioners too hard?
What would you implement?
The only thing I could imagine not being too explosive is transitioning all pensions to a 401k-type thing instead of current workers paying for retired people.
For the US, it's tricker since you already have both. Maybe SS could be transfered into some other self funded type thing.
People would hate it, especially in Europe, but from a political optics angle, you could still say that we simply don't have enough people paying into the system to make it work, and (in the EU)could also highlight that a 401k system works
The other option might be means testing, but i feel like this is politically toxic, and if most people have shit incomes, the issue of funding amongst the dwindling workforce is still there.
Bonus question, which country do you think has the best pension system at the moment, who is the poster child? Sweden maybe?
That would be great, but they'd have to print the money to fill those accounts, precisely because current workers' "contributions" are going to the current retirees.
I've never thought this was a particularly difficult problem. Means testing + increasing age of eligibility are all you need. The element I would add is legal elder support requirements on families, similar to child support.
I'd set the means testing at median income or net worth: i.e. if you either earn more than an average income or have a greater than average net worth, you don't qualify.
Age of eligibility is actually sort of complex, because you can withdraw early or postpone until later. The way they do it is allowing prorated withdrawals designed to empty your balance by the time you die, with an earliest withdrawal age of 62. They should move that 62 up by one year every other year and base the life expectancy estimates on more generous models. That will lead to fewer people reaching withdrawal age and fewer outliving expectations.
The elder support requirement is the biggest change. Families with the means to support their parents and grandparents should be required to do so before taxpayers are required to do so.
the transition is the hard part, but the gov has no problem doing a bit of printing when needed!
Increasing the age is a hard one, though, voters hate it, when France raised the retirement age from 62 to 64 the country basically lost its mind, millions protesting etc.
ahtough in fairness, the French do love a protest
The thing is, sliding eligibility forward impacts relatively few people, so you might be able to pull it off. Means testing seems like the easy one: everyone hates rich freeloaders.
I like this approach
Here in Peru, since the supposed pandemic and over the last five years, the government has passed or imposed laws allowing pensioners to withdraw all their money from the "AFPs"—that's what they call the pension system here!
And I've seen elderly people withdraw a significant amount of their life savings and go straight to the bank and deposit it with the most "pleasant and wonderful" advertising...
And the endless cycle begins again...
did they get a better deal or interest rate when redepositing?
No! There were banks that offered people lower interest rates for depositing their money and leaving it there long-term, and people accepted simply because of the misguided notion that "Your money is safer in the bank."
The system simply pushes you to keep falling into the same trap...
Canada has some ideas