[graemep]

If pensions come from government funds it matters if you are looking at the impact on the economy. The taxes pensioners paid have presumably been spent, so while their past contribution is an argument for their entitlement to pensions, it does not solve the problem of where the money will come from.

Its even worse in the UK where we have a special additional income tax (NI) on earned income (things like investment income are exempt), that is higher on people with low to moderate incomes, that is primarily used to pay (current) pensions (a little bit is set aside for future pensions, but there is only enough set aside for less an an year of payments).

[Epa095]

It does not really make a big difference if the pensioner saved 100k while working and put it in their couch, or if they payed it in ekstra taxes which got saved by the government, or if the government presses new money.

The important part is how large fraction of the population work, not where the money for the remaining fraction comes from. Money is only a representation of value, value created by the working fraction.

[graemep]

True, but that is at a different level and a bit more complex. I was talking about the problem of government finances - i.e. government revenue vs expenditure.

Setting aside money, and where you put it, makes a big difference. It might be in a sovereign wealth fund, or used to finance govt debt (as in the small fund that exists in the UK) or invested in shares by a private pension fund, or be a liability of a past employer. In some of those cases value might be generated in another country.

You are right in principle but there are big practical differences too.