[Apanatshka]

An important and sometimes forgotten thing about democracy is that it isn't as simple as the majority rules. It's the majority rules while taking minorities into account. In a well functioning representational democracy this is kept in mind my career politicians. In a hybrid between representational and direct like in Switzerland, the population can overrule and just go with majority rule.

For example, the Swiss pension system is similar to others in Europe, where the current working population pay taxes almost directly towards pensions of the retired. Since this system will break down if taxes aren't increased like crazy or pensions lowered, politicians have been trying to change the system. But there are too many people soon to be retired or already retired that care less about their country's youth and future than their own pension, so they keep blocking changes. So every democratic system has its tradeoffs...

I learned this from a young Swiss when I was visiting Switzerland and praising their way of democracy. It was a few years ago though, so maybe this info is no longer accurate. And I didn't fact check, it was just an example brought up in casual conversation.

[soco]

Only partly right. The Swiss pension system is based on 3 pillars, and you described only the first one, namely the solidarity pillar. The second one is the mandatory saving which accumulates only for you, and there's a third one, optional savings - also tax exempt (up to some extent). So while yes the usually older politicians are looking at their own retirement horizon, there's wiggle room from the other two pillars. And adaptations of all three happen almost every second year with the goal to at least push further away the breaking point.

[saiya-jin]

Yeah the description above is very outdated, currently the main focus is on everyone's own savings (2nd and 3rd pillar), its foolish to rely on the common 1st one for anything.

Switzerland has a bit unique position within Europe by having the highest salaries, so plenty of folks retire to places like Spain or Italy (or Bali) where your Swiss pension can give you relative luxury lifestyle compared to not so great lifestyle back en Suisse.

Generally everybody in Europe wants to have Swiss pensions, not only for the amount but also for the 3-pillar systems where you actually save decent amount for yourself to live comfortably and/or retire early. Not the case in most european countries AFAIK.

[soco]

Germany, France or Romania have similar 3 pillars, so I'd say the system is far from being a Swiss particularity. Edit: the Swiss pension is so high because the contributions are also that high. Nobody stops an Italian to contribute four times as much, in order to receive four times as much pension. But the difference as you say comes from the salary level - although the expenses are just as high, so if you spend your retirement in Switzerland you will feel just as rich as a German in Germany. Only the Swiss retired (and healthy) going abroad get to feel that advantage.

[tomp]

No, the Swiss & EU are right in this case.

Any form of retirement works the same - young people working to serve the old. How you finance it is a different question - but clearly increasing taxes & lowering pensions is just one way of the system breaking down. Another way is, everybody saving while working, not having kids, then spending when retired (results in market crashes & massive inflation).

The original problem is not having kids. The “direct transfer” system simply keeps incentives more aligned.

[phicoh]

Many countries have realised that relying on a continuously growing population has its own problems.

So you need a pension system for a population that doesn't grow. Basically that means that everybody has to pay for their own pension. It doesn't really matter whether you do it as taxes that get paid to the people currently retired or by saving money.

The solution The Netherlands came up with (next to moving to an individual pension system) to try to raise the retirement age to 67. This is quite unpopular. But it's either that or a low pension.

[tomp]

No, you missed my point.

Pension isn’t about money. It’s about work. Less working adults => less surplus value created by society => less resources available for retired people.

How you finance that - via direct payments / taxes, or via individual savings - is besides the point. Neither of these can defeat the economics of supply (of working-age adults’ labour) and demand (of the retired non-producing population). If you try to force it, you’ll just cause other issues (e.g. housing / market crashes caused by all pensioners cashing out at once, or wage/food inflation caused by labour shortages).

[phicoh]

That why I specifically mention The Netherlands raising the retirement age. That causes both more labor to be available and reduces the number of people who are retired.

Pensioners don't cash out at once. The number of pensioners grows slowly which many result in gradually lower demand for stock or real estate. No need to expect a crash because of this.

No need to expect anything to happen to food either. Food production is highly efficient and relies on only a tiny fraction of the total labour

[immibis]

This, TBH. Far too many people think economics is about money. Economics is really about distributing goods and services and work. Money is just one possible means to that end (perhaps the best one).

[immibis]

It does matter, because all the saving and dissaving of the saving-based scheme distorts financial markets and sometimes doesn't work anyway. For example, imagine a system where everyone buys an extra house, then sells it when they retire. Now there are twice as many houses as there need to be. And therefore everyone has to commute 1.41 times farther on average; twice as much lumber is used up; twice as many builders are needed. Now imagine the next generation invests in something other than houses because houses are too expensive because of all this extra demand. Let's say tulips. So the first generation goes to sell their houses to retire and... wait, nobody wants one? They already have one and they don't want to buy a second one for their own retirement savings? Well, then the housing market crashes and all those people lost money on their retirement. (And the third generation will buy up all these cheap houses and say screw the second generation's tulips, we don't want tulips...)

[phicoh]

I naively assume that if you buy an extra house as investment, you rent it out. So the house is actually being used, no need build extra houses or have a longer commute.

Blindly investing and then assuming that it still has value when you retire has a lot of risks. This sometimes happens with owners of small shops who hope to retire with money they get from selling the shop.

[distances]

Many European countries have massive pension funds collected over the decades, with accumulation and payout planned in advance to match the demographics. This is the better model parent suggested that is hard to get through if it wasn't started during the boomer generation.

[sampo]

> For example, the Swiss pension system is similar to others in Europe, where the current working population pay taxes almost directly towards pensions of the retired. Since this system will break down if taxes aren't increased like crazy or pensions lowered, politicians have been trying to change the system. But there are too many people soon to be retired or already retired that care less about their country's youth and future than their own pension, so they keep blocking changes. So every democratic system has its tradeoffs...

Other European countries (not all) have similar pension systems that you describe, with same problems, and even though they don't have the Swiss direct democracy, they have been equally unable to change their systems.

[immibis]

Is this better or worse than the OTHER kind of pension system, where people are required to hoard resources over their lifetime and then in their retirement, slowly release those resources back to younger people (who will then hoard them for their own retirement)?