Andrew Tate says that pensions are a Ponzi Scheme that depends on new incoming people to support the underlying base of people (at lesst that’s how I understood it).
Is there any truth to this? Or is he just being hyperbolic?
anovikov•1h ago
Well, in a nutshell that is undeniable. Pensioners don't work. Other people fund them. No matter how it is calculated - whether through ownership of assets, direct government obligation, or otherwise - that product consumed by pensioners, is produced by workers, it doesn't come from nowhere.
onesandofgrain•1h ago
Growth must persist
magicalhippo•1h ago
Don't know about Tate and other countries, but that's literally how public pensions work here in Norway. The government relies on taxes paid each year to fund all the pensions they have to pay each year.
Worked well when the country was growing in population, not so much now that the growth is negative (especially working population). Hence it's the primary reason why we renamed our "Oil fund" to "The pension fund"[1].
For private companies it's different, they have to actually put money in a personal pension account for each employee. The company can't fool around with it afterwards.
What would happen if the norwegian government spent the whole fund?
bryanrasmussen•1h ago
he could or could not be correct depending on how any particular pension is constructed, but as I understand most pensions are constructed as taking the money you put in and investing it and then paying you out of what gets returned from the pension.
Why don't you just invest yourself?
Well first because pensions being large scale investors can get better results and second because most people don't do the smart thing and put some money aside for a rainy day, a pension forces that.
In such a scenario the incoming people function more as a failsafe, the investment should handle paying out for your pension but in cases where there have been a problem in the market, you have outlived your pension expectations etc. you then end up having the failsafe of new people always putting money in. Thus giving the pension an extra layer of security than just investing for yourself.
on edit: of course there can be difference between governmental and company pensions.
onesandofgrain•1h ago
Isnt that the american style? Saving up for pensions urself? I never quite understood the steucture
bryanrasmussen•1h ago
the pension that the government provides in most places is not enough to support someone in a continued middle class life, therefore you may often get a pension on top of your governmental pension from a company. The money paid in to this pension is often beneficial to you in that it will not be taxed as part of your income therefore you are deriving a benefit for your work that you do not get taxed on presently. Obviously when you get your pension you will be taxed but probably at a lower rate than when actually working.
These pensions that invest and compound your investment over time can turn a comfortable middle class life into a very comfortable retirement, the American model instead of the European model of these kinds of company investments tends to be more risky however, and so there can often be scandals where you were supposed to be getting a pension but the rich company looted you and you're screwed hah hah.
bryanrasmussen•1h ago
so for the case of negotiating for a job in Europe, if it is a good job, you should often consider not just the present wage but what the pension gives you.
For example you may get a pension of 5% of your wage goes into the fund, and the company you work for matching that, indicating 5% extra wage that is not part of your taxed income. Depending on how your life is structured it may be smarter to go for a pension.
onesandofgrain•1h ago
Is there any truth to this? Or is he just being hyperbolic?
anovikov•1h ago
onesandofgrain•1h ago
magicalhippo•1h ago
Worked well when the country was growing in population, not so much now that the growth is negative (especially working population). Hence it's the primary reason why we renamed our "Oil fund" to "The pension fund"[1].
For private companies it's different, they have to actually put money in a personal pension account for each employee. The company can't fool around with it afterwards.
[1]: https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Nor...
onesandofgrain•1h ago
bryanrasmussen•1h ago
Why don't you just invest yourself?
Well first because pensions being large scale investors can get better results and second because most people don't do the smart thing and put some money aside for a rainy day, a pension forces that.
In such a scenario the incoming people function more as a failsafe, the investment should handle paying out for your pension but in cases where there have been a problem in the market, you have outlived your pension expectations etc. you then end up having the failsafe of new people always putting money in. Thus giving the pension an extra layer of security than just investing for yourself.
on edit: of course there can be difference between governmental and company pensions.
onesandofgrain•1h ago
bryanrasmussen•1h ago
These pensions that invest and compound your investment over time can turn a comfortable middle class life into a very comfortable retirement, the American model instead of the European model of these kinds of company investments tends to be more risky however, and so there can often be scandals where you were supposed to be getting a pension but the rich company looted you and you're screwed hah hah.
bryanrasmussen•1h ago
For example you may get a pension of 5% of your wage goes into the fund, and the company you work for matching that, indicating 5% extra wage that is not part of your taxed income. Depending on how your life is structured it may be smarter to go for a pension.