Maybe instead we should try investing in this area (reducing the burden on services) instead of simply trying to reduce the quantity of folks claiming from the state pension pot.
Now people live way longer, but the retirement age never got adjusted properly to the new reality. So 15-20 years of retirement is the new normal.
In addition, way fewer young payers for the now old.
I think it is possible, but we need to raise (corporate) taxes a lot, and this needs to happen globally, as companies move.
As a star I would love to see global minimum corporate taxes, and then take it from there.
Only if they are poor. If they're rich, they can continue "producing wealth" from interest and investments even after they're dead.
It's a silly thing to say, of course, but it's built into most people's assumptions who are discussing it.
I think it is a balance.
Auctioning this work to private companies should theoretically make it more cost efficient - and I think it is.
At least I hear that workers a much more stressed than they were historically, so I don't hope this comes with no benefit...
https://countryeconomy.com/countries/compare/denmark/usa?sc=...
I think the system has failed at this point, when you are expected to work that long.
And this is the case in all western countries.
It is just being realized in different ways.
Fundamentalle there are 3 ways to cope
1. reduce pensions
2. Raise taxes
3. Decrease amount of benefit receivers.
Denmark choose number 3
Birthrates seem very hard to change and even if change would happen it is much too slow.
Germany did the experiment on immigration and has not seen GDP growth for half a decade. There the system is failing far worse in some ways, but in Germany employees are paying directly for the pension plans, so the state just raises the employee contributions.
Also, the beaurcracy is the real culprit for growth.
I think, if you are concerned with the cultural shift, you can give immigrants temporary term VISAs and make it clear their stay is going to be strictly temporary. That was supposed to be how the Gastarbeiter system works. Thing is, when you have already on boarded a foreign worker and have had them working for you for 2 years already, you don't want to let them go and replace them with a fresh foreign worker who you have to retrain.
So you can reduce pensions, improve the situation for the youth, take efforts to get an improved birth rate, making use of the resources lost to pensioners, and then maybe you can raise the pension later on once you realize things are stable.
I suggest instead altering the male/female ratio, so a stable or growing population can be maintained at lower TFR. Technically, filter sperm to remove those with Y chromosomes before artificial insemination.
Also, that's a wild solution. You'd have to do away with monogamy which would cause some pretty insane societal shifts. However, as a straight guy I can see the appeal lol.
I'm imagining it becoming a social norm for single women to have (at least) a single child. Perhaps they'd team up to make raising them easier, forming loose family-like units. Romantic attachments would be optional.
One consequence of such a situation would be an incentive toward private positive eugenics. Women would prefer semen from top quality donors.
For an interesting case study, compare Japan (who refuses to allow mass immigration and is at risk of going extinct) and the UK (who has embraced it and is on the way to becoming Muslim-majority). It'll be interesting to see in 50 years which one has had better outcomes.
[1] https://en.wikipedia.org/wiki/Religion_in_the_United_Kingdom
> Between 2001 and 2009, the Muslim population increased almost 10 times faster than the non-Muslim population.
https://en.wikipedia.org/wiki/Islam_in_the_United_Kingdom?wp...
Granted 2009 was a while ago but they're still the fastest growing population in the UK by a lot.
If it grew 10x between 2001 and 2009 (starting from a very small base), then between 2009 and 2023 it grew by only 0.3x (see graph below).
So rate of growth went from 10x to 0.3x in around a decade, this is a hugely significant deceleration. It actually implies muslim community as portion of population is heading lower.
https://new.islamchannel.tv/wp-content/uploads/2024/04/63860...
* well, not even current. 15+ year old
https://en.wikipedia.org/wiki/Religion_in_the_United_Kingdom
[0] Figure 2.7 of the Danish Government report "Økonomisk Analyse: Indvandreres nettobidrag til de offentlige finanser i 2018" - https://fm.dk/udgivelser/2021/oktober/oekonomisk-analyse-ind...
- increase productivity more than how much the workforce/receivers grow.
And if AI/robots eventually deliver, we're soon going to need a discussion about lowering the retirement age to 55 or even 50 if we don't want 30% unemployment anyway.
- indifferent to how much automation you have, people still need to pay for it, for money they don't earn.
And as such, it feels like labelling that “raise taxes” is disingenuous.
Indeed the normal Understanding is not only about increasing rates - look at Switzerland eg.
A part of necessities are access to assets.
In the model you propose, inequality in itself will make those more expensive.
They talk abiut the squeeze, if Birthrates increase too suddenly - workers would both have to pay for the elderly and the kids.
If one generation has a fertility rate of 1 child per woman, the next must have 4 children per woman to undo the demographic change.
The people in the “corrective” generation must support their own two elderly parents plus four of their own children. It becomes practically impossible.
The country and the individual has the same problem. But it also goes a generation further.
There was a link on HN recently which I can’t find. It discussed how we are in an unusual time, where kids can often meet their great grandparents. Previously people died younger, so couldn’t. Now people are having kids at an age where it will be unlikely for them to meet their great grandchildren.
To me it seems rather obvious: you need both the will and the means to raise 3+ children.
In fact, they may majority be of subsistence in which case the entire dollar value of all of their stuff is simply the land.
Increase the number of (young female) immigrants
1. A state provided welfare benefit Or 2. A privately held long term savings/investment account
Would not be very motivational if you work hard your whole life and then you are considered a useless burden once you retire.
The scale of the problem is absolutely mind-blowing.
Sustainable population and economic growth at that rate can't happen indefinitely.
Some people have been vocally saying this system in unsustainable long term, just that Europeans governments never wanted to publicly admit this due to fears of loosing elections, so they kept kicking the can down the road.
It’s not really a Ponzi scheme, it is completely possible for the system to be balanced, it’s just very very hard to get people to vote for you if you say they’ll have less tomorrow
This is exactly what happens in Denmark - a balancing of the pension system.
Also,rgis has been planned since 2006 - so it is nothing new.
Hence only doing this for future pensioners will give equal time as reitred.
(at least, this is the core reasoning)
Definition of a Ponzi scheme: A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investor. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves.
https://www.investor.gov/protect-your-investments/fraud/type...
That's exactly how pensions work in Europe. Replace "Ponzi scheme organizers" by "legally elected governments" and here you have it - you have a whole continent of people believing that their pension is a given. Not everybody may like it, but that's the hard truth.
In the US, people contribute towards a 401K, and choose how to invest, but typically pick up just the S&P 500 - anyway and at least that money is somehow what they have saved for themselves.
But I agree with your statement "it is completely possible for the system to be balanced" - yes a Ponzi scheme can be absolutely balanced, you just need enough participants ...
pensions on the other hand don't have the quality of deception and the value is straightforward - it redistributes wealth from the younger population to the older ones. this reduces the need for individuals to plan their retirements as the state takes care of it. as pointed by another post, you don't need a pyramid here, just somewhat equal proportions of population on each side.
wouldn't you characterise any tax scheme as a ponzi scheme? unemployment benefits, healthcare etc? what makes them different from pensions?
but i do agree that one should not think of pensions as a given. its worth pointing out that there are two types of pensions - defined benefits and defined contributions.
I suppose increased life expectancy and fewer young people both contribute to worse dependency ratios.
If pensions were funded by actual retirement accounts, where employees invested money into some state fund and have it paid out for retirement this would be entirely unproblematic.
But the pension system in many EU countries is set up in a way in which tax contributions now finance pensions now. This can only work with a steadily growing economy which continually generates more revenue when more people retire. In some sense it is a literal Pyramid scheme, in which the obligations are continually pushed to younger generations, which have to contribute based on how many pensioners there are.
Especially now as EU economies become weaker this issue becomes bigger and bigger.
Denmark has private pensions like the 401k system in the US.
People can start tapping into these up to 5 years before they are 70.
In reality most people will go down in time and partially tap into private pensions and saving long before they turn 70.
This is opposed to other European countries, like Germany, that does not have these private pensions, but only retirement insurance.
Just as in Germany Denmark funds it's pensions through taxes, Germany additionally funds them through employee contributions.
In Denmark you have ratepension, which truly is an investment account and not an insurance product.
Their retirement savings can be in public company stocks instead of government guarantees but that only works if there are people willing to buy those stocks (ex: younger people saving for retirement).
Setting aside the issues of declining birth rate for a minute, this seems like a reasonable adjustment to the other factors?
Retirement age has not gone up since it was created in 1940s. Not crazy to raise it a little.
Quickly looking at Denmark articles, it seems they’re raising the age to adjust to life expectancy increases as well.
I don’t see this a sign of the system failing.
That people are living longer is why the system is failing. It's an interesting thought experiment to consider whether any country would introduce a state pension now knowing how much they cost.
Or some may say it got outdated.
It was started at times when the life expentancy was low. And it was given at age above the life expentancy. And in the beginning not to everyone. The retirement age got lower and given to broader set of population gradually. These moves made governemnts popular, so it was no brainer to introduce, on the expense of future generations.
Birth rates that can maintain the economics of relatively low retirement age could not be sustained without destroying the planet. Actually has to be reversed still as it went too far already and deteriorating as we speak, especialy with the ongoing large increase in the overall life quality - causing decreasing birth rate alone - and healt. The system was destined to fail. But how to take away rights? It is much harder than giving, especiallly when the advers effects are for current voters, not future generations?
So the necessary steps are postponed, postponed, postponed yet again, filling bigger and bigger holes in the budets, through borrowing, making the problem worse, again for future generations. Very few countries do tiny adjustments, and even those are met with huge protests mostly.
I wonder what the future holds. Painful adjustments or more painful collapse later in some form.
With a growing population of pensioners and a declining population of taxpayers many EU countries are walking towards a future where it is abundantly clear that the state can not finance pensions. Especially when at the same time their companies loose their economic competitiveness.
I do not believe that raising the retirement age in 15 years will be of any major help here. And it seems especially outrageous for the younger generation.
People also focus on a fixed percentage being returned while ignoring the long term increase in productivity and people’s standards of living. In real terms people in 2025 get way more out of pension systems than people did in 1925, that’s as central to the problem as any changes in lifespan.
The increased medical costs as we go, however, might actually make it worse, faster.
The current system is just not broken but unfair. In many EU countries, people are not contributing for themselves, but for the previous generation being currently retired. In turn, it's supposed that babies born today will work for the pension of the currently active generation. This pension system is nothing else but a pyramide scheme and that scheme is now breaking due to a demographic issue - just like a traditional pyramide scheme would break because there are not enough participants to that scheme ...
But, I just looked it up again for this comment and that same rule says "No changes to social security" in reconciliation. It is specifically called out as forbidden to touch via reconciliation unlike almost every other program. So, maybe you are right, it will just be ignored because it doesn't seem possible to quietly change.
Look at all these people around you in their forties who are still renting. They are basically too late to buy. They will be "forever renters". This means they will have to work until death, as their rents continue to rise when their peers who owned homes took their downsizing premium and lived off of it for a few years.
What's crazy is the number of grown adults who think their 401ks will magically grow to fill the gap.
In 1930 Keynes projected that by 2000 their grandchildren could work 15 hours per week¹. Now the projection is that we will work more and longer in the future.
And what is this labor supposed to even do? How much of even current work really increases wellbeing?
Graeber's thesis of bullshit jobs becomes increasingly more convincing: work isn't about production, it's about social control².
That said I agree we should be further ahead in paving a way to paradise.
> Now it is true that the needs of human beings may seem to be insatiable. But they fall into two classes -- those needs which are absolute in the sense that we feel them whatever the situation of our fellow human beings may be, and those which are relative in the sense that we feel them only if their satisfaction lifts us above, makes us feel superior to, our fellows. Needs of the second class, those which satisfy the desire for superiority, may indeed be insatiable; for the higher the general level, the higher still are they. But this is not so true of the absolute needs -- a point may soon be reached, much sooner perhaps than we are all of us aware of, when these needs are satisfied in the sense that we prefer to devote our further energies to non-economic purposes.
Couldn't they, having the same standard of living as in 1930?
Personally I think we should revert to the earlier system, where you are free to retire as soon as you want on your own money, but if you want the state (=other regular people) to fund your lifestyle, you need to be no longer fit for work
If I remember correctly, Denmark even removed a holiday recently. So work more days a year as well.
That's the problem here. That a few people reap all the benefits of this, while the rest of us toil.
Reinvested to increase future productivity
Extending the retirement age doesn’t really help the situation much, as you need younger and cheaper pilots to fulfill the roles of pilots who are retiring.
The problem is, becoming a pilot takes a fair amount of time, over $100k in training fees, low pay for a while until fully certified with hours in, a very mobile lifestyle, and now you are subjected to physical as well as mental demands of the job certification standards.
FirmwareBurner•1h ago
How will this work realistically? How will you convince employers to keep workers employed till 70? Especially in fast changing fields like IT where a lot of old knowledge and experience gets considered obsolete by those screening resumes. Sure, people might survive longer, but that doesn't mean all workers will be equally mentally or physically fit to still perform well at some jobs at 70 as well as a 30 year old, especially if they're mentally or physically challenging jobs.
I'm not talking about government paper pushing jobs, but private industry jobs with international competition where you need to be agile and up to speed to survive as a business. This system worked for the boomer generation in slow moving highly regulated industries like steel, rail and automotive, where you'd spend all your life at one company who'd promote you and invest in your training till retirement, but this isn't as common anymore. International companies now want things done faster and cheaper and can't be competitive keeping 70-year-olds on the payroll idling around waiting for retirement.
For example, here in Austria, if you're laid off at the age of 50, the chances of getting another job at that age for many professions are already next to zero due to rampant ageism, so workers in some professions end up on long term unemployment till retirement, yet the government agencies are not talking about this major issue and just tell the 50 year olds on long term unemployment to "make a more colorful resume to stand out"(I shit you not). You're also not allowed to take your contributions out of that pot early or all at once to fuck off out of the system and be on your own if you want, proving it is Ponzi scheme in disguise.
bluefirebrand•1h ago
Ok, so if you're near retirement now you're fine
But if you're younger, you can look forward to not retiring until 70, as if the younger generation hasn't been shit on enough
Amazing stuff. One last ladder for the older generation to pull up behind them before they die, I guess
tossandthrow•1h ago
the housing market in Denmark is approachable - you can get houses near major cities for usd 80k.
Social security, you can go unemployed for years and still pay your bills.
Government provided education with stipend - having masters degrees are common.
And the economy is strong.
Most Danes understand that this is inevitable - the big issue is that the politicians have given themselves more favorable terms.
polipus•1h ago
- housing for 80k USD is 525k DKK: no way you can find anything at that price anywhere close to cph. Not sure for other "major" cities, but in cph you can expect to pay 4mil DKK (600K USD) for a ~60 sqmt apartment, prices will fall outside the cities, but nowhere close to 80k USD. Where did you get that number?
- you pay for your unemployment benefit, thought an a-kasse. Its not forever and it might barely cover your bills depending on where you live/your mortgage. If you have family its probably not enough and you need to add an insurance on your salary on top of that.
Just wanted to give my 2 cents.
tossandthrow•1h ago
Look 20 minutes out of Odense, Aalborg, Randers, etc.
Don't let yourself believe that a country is nothing but its capital - it is correct, that if you decide to live in a 4mil DKK apartment in the Copenhagen area, then you have also opted out of public help, and you are on your own.
holsta•1h ago
There are 53706 homes for sale today. 2784 of those are actual homes, not empty lots, costing less than 600K DKK.
I would not expect to live a healthy, comfortable life in most homes at that price range. Draft, mold, poor insulation and high energy bills.
tossandthrow•1h ago
Supermancho•1h ago
pipo234•1h ago
Only for a short period were western population growing so fast relative to small number of retirees that transferring that responsibility to government was a no brainer.
With diminishing demographics anywhere except maybe Africa, we'll need to be more creative once again. Raising retirement age is just one of many hard but inevitable policies.
_elf•1h ago