[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.