[samwillis]

I honestly don't get it, but I'm not an economist so I may be wrong.

Pensioners cost the state a lot, and in my naive understanding population growth - so more tax payers - has funded that for the last 100 years. Declining birth rates, and reducing immigration, reduces proportional tax income and therefor smaller pot for pensions and healthcare.

But as I said, not an economist.

[TheOtherHobbes]

This is why the UK is talking about getting retired people back into work. And is well on its way to ending pensions altogether.

The age at which pensions are paid out has been creeping upwards and is now heading towards 70. What should have happened is that pension payments were ring-fenced, but of course government finances don't work like that.

Most pensioners vote Tory, so the government is literally robbing its own base.

And most haven't realised it.

[revelio]

You can't ringfence pension payments if by ringfence you mean just store them in a savings account. Inflation would destroy the saved money completely, so the funds have to be invested. In turn those investments have to yield enough to cover both inflation and expected investment losses, whilst still yielding enough to pay out reliably over the average expected lifespan post retirement.

Unfortunately if you do the numbers it doesn't work, financially. The number of years you have to pay out to people is so large that you need a very high ROI to keep the fund stable, but ROI sometimes wasn't high enough and the funds fall behind.

This isn't a Tory or UK or even a government problem. It affects pension funds around the world and private funds too.

[tivert]

> You can't ringfence pension payments if by ringfence you mean just store them in a savings account. Inflation would destroy the saved money completely, so the funds have to be invested. In turn those investments have to yield enough to cover both inflation and expected investment losses, whilst still yielding enough to pay out reliably over the average expected lifespan post retirement.

Or just cut to the chase, and realize the money is only a unit of exchange, and not a store of value. This idea of a society saving/investing money to pay for retirement is just nonsense, if there won't be enough people to pay the money to for job to get done.

Ultimately, retirement is paid for by spending a fraction of the current economic output, which can't be banked.

[revelio]

That's a much better way to phrase it, yes.