63

If your country also has a welfare system, and someone doesn't save for their retirement, they'll end up on welfare when they stop working. So the government is going to have to pay their expenses either way. The forced retirement savings ensures that this won't all come out of public funds, but will instead come from money they put into the system earlier. ...


53

The question is based on a faulty premise that is all too common in lay discussions of the issue and the broader political debate. A generation “being responsible just for themselves” is an illusion, the percentage of retirees in a society is not only relevant to pension funds, it's always the main factor in the stability of retirement systems, whatever ...


25

Simply put, when people are too old to work, they still need to live somewhere, they need to eat, and they need medical care. The alternatives to forcing people to save are: Let people who run out of money die, or kill them outright. Support people who run out of money at taxpayers' expense. Use reverse inheritance to get relatives to pay for them. ...


17

Malaysia does have a retirement fund system that works exactly the way you describe but Malaysians don't consider it a pension fund (explained later in the answer). The EPF: Employees Provident Fund Originally formed as the Employees Provident Fund Board by the British (EPF predates independence), the EPF was founded to provide funds for people entering ...


10

Cynically, pension funds have money. Governments like money. At worst, corrupt politicians can line their own pockets. At best, they can use the money to buy the many wonderful things governments like to purchase: food for the poor; tanks for protection; infrastructure for jobs. More nobly, the government could be concerned about the private funds' ...


10

You won't get a satisfactory answer to this question. I'll try to elaborate why. But, please, be prepared for the fact that you really won't like the answer. The whole concept of past vs present contributions is a misnomer unless the pension fund is no longer accepting contributions at all. The 1st reason for it is that in order to offset inflation, ...


8

Hard to believe nobody covered this yet. Government-forced retirement savings has by its nature the nice property of not being lost in bankruptcy. While this doesn't have to exist (we note in the USA, Uncle Sam will gladly collect what it is due from Social Security (the US version of forced retirement savings)), it exists by default and so the lawmakers ...


8

An article in Politico describes the UKIP position: Nigel Farage [...] has been an MEP since 1999, [...] he would expect to receive his full pension — 70 percent of his salary, or around €6,000 a month. UKIP is quite clear that they will fight to keep the EU pensions after the U.K. exits the bloc. A spokesperson said Farage and co “were elected and ...


8

It is a reflection of traditional gender rôles and stereotypes. The husband earns the money, the wife cares for the children. The husband would be older than the wife and so would start receiving a pension at about the same time. Also, women were seen as weaker and frailer and less able to work into her sixties. These rôles were never as fixed as lawmakers ...


8

For Hungary the private accounts were not technically forcibly taken over by the government, however between November 2010 and December 2011 all payments to the private accounts were suspended and those with private accounts had to opt-out of the government plan to merge the private accounts into the public ones. The 8% of a persons paycheck that once went ...


7

Not the government Here in Denmark we pretty much have "forced" retirement saving. Almost everybody in regular employment pays about $15 a month plus 12% of their monthly salary into a pension fund. This 15 Krone plus 4% plus 8% of income is not government mandated. It is union mandated. The union for that industrial sector mandates that. You can read ...


7

If I remember correctly, such plans have already been discussed here in Germany, however there are some drawbacks about the government acting as an investor on behalf of the people as compared to a system that is paying out pensions with the current income and only keeping a small reserve of money If you have one big pension fund, you get a really really ...


6

In Poland, few years after the new mandatory private pension system was established, some citizen requested to withdrawn his funds, arguing that those were his private savings. Eventually the case hit the supreme court, which fearing that this precedence would result in collapse of the system, ruled that the money collected by the state and transferred to ...


6

The original argument as put forward by Wilhelm I in 1881 is still, at its heart, sound: ". . .those who are disabled from work by age and invalidity have a well-grounded claim to care from the state." The alternative to state pensions is to accept that potentially a large number of people who are too old to work will be destitute and likely suffer an ...


5

Partly it is a form of risk pooling, also known as insurance: not everyone lives to old age, so not everyone spends money in old age. By pooling retirement spending together, the level of spending is made more predictable for each payer. In the United States, where I live, this program is even titled "old-age insurance." The idea is that you insure against ...


5

There is nothing there that I can find that is specific to British members of the EU Civil Service. What I do see, in Article 142, Paragraph 6, is a provision to be made for the UK to pay a share of pension benefits to all EU civil servants. For the pensions referred to in the first subparagraph, the payment by the United Kingdom shall be the sum of ...


5

Although you are referencing Denmark, I believe that you are asking this question generally. I do make several assumptions: Many people, left to their own devices, will not save enough to live on in retirement. Also, Crazy Stuff (TM) can happen, leaving people destitute. Many nations lack reliable local charity (familial, religious, or otherwise) or see ...


5

Why does it need a bailout every year? As usual with accounting, because the income is less than expenses. Specifically, expenses related to paying its liabilities. Income is obvious - advent of electronic communications (and competition from UPS and FedEx to top that off) drove down revenues significantly since 2000. As far as expenses (and liabilities):...


4

Depends on the state. Illinois, for instance, is very limited in what it can do because of how its supreme court interprets the Illinois constitution The Illinois Supreme Court on Friday unanimously ruled unconstitutional a landmark state pension law that aimed to scale back government worker benefits to erase a massive $105 billion retirement system debt,...


4

If the pension is un/underfunded, that's not the union's problem. The money that is supposed to be in the pension was generally decided on previously by negotiation between the union in the district. Once both sides have signed the contract, it is the district's responsibility to hold up their end of it. This includes paying any pension contributions it ...


4

Employees, both in the private and public sector, often get complicated pay packages that include monthly salaries, pension entitlements through different schemes, medical benefits, and other allowances. In many parts of Europe, the public sector pay contains a higher percentage of deferred entitlements and a lower percentage of immediate cash payouts. An ...


4

The definitions of deferred versus immediate payouts in o.m. answer are excellent. The explanation for why the public sector puts more emphasis on deferred payouts only covers the 'nice' aspects though. Politicians are only humans and not in power indefinitely. In democratic countries often only a couple of years. If you promise say a fireman a mediocre ...


3

It all depends on the kind of safety net you have. If you have a "let them eat cat food" philosophy, then giving people the "choice" to be irresponsible now does not burden society, financially, later when they are mired in poverty and can't afford to live. If your safety net takes care of people, as it does in most of the western world, and especially in ...


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