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Pension is a Ponzi scheme. Explained in terms of economic theory, if everybody works and saves in time period 1, and retires and receives pension in time period 2, then... their pension is worthless, because there's infinite inflation, because no more goods and services get produced.

Retirement depends on having young workers. People approaching 60, 70 simply didn't have enough kids to have good retirement. It's not a problem that has easy and/or fast solutions. Yet, actions have consequences...

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> Pension is a Ponzi scheme. Explained in terms of economic theory, if everybody works and saves in time period 1, and retires and receives pension in time period 2, then... their pension is worthless, because there's infinite inflation, because no more goods and services get produced.

You've created an impossible situation which will never exist and then offered it as an example of why taking care of the elderly, something humans have done since before recorded history, is flawed.

As Bill and Ted would say: Bogus!

I think what they missed is that people typically work for much longer than they are retired.

If the periods were of equal length, I think the Ponzi scheme thing would be true.

As is its sort of a modified fractionated ponzi.

Ponzi, or no Ponzi, it's still an illusion: let's assume that we all generate enough money saved in those funds during our productive years to sustain ourselves in senior periods, even counting in the almighty inflation. The problem is it's not money you need when old, and frail, you want somebody doing work for that money. So the whole scheme still requires enough young workers entering the market, and them be willing to perpetuate it. Which is kinda not guaranteed if each gen is smaller then the previous one.

> Ponzi, or no Ponzi, it's still an illusion

What do you think money is?

> you want somebody doing work

This is one reason why the robotics work going on right now is so exciting. Without the demand for elder care, it wouldn't attract as much investment or development.

>What do you think money is?

Money is basically a coupon for labor. If there are no vending machines (read young workers) for labor coupons, then you won't get labor, no matter how many coupons you accumulate.

Holding money does not teleport people into the future. (= the store of value myth)

Seniors are also really expensive. By some estimates you spend half of your lifetime healthcare cost in the last five years of your life. It typically takes multiple working people to support a single senior on government benefits.

Do they?

0-25 education, 25-67 work, 67-82 pension, it's almost equivalent (42 working, 40 not working)

Education isn't work?

> why taking care of the elderly, something humans have done since before recorded history

Well yeah, but before government-organised pension, it was your kids taking care of you when you get older, so the system was much more balanced (or rather, only imbalanced on the micro scale, not at a mega scale we see now...)

This is missing the elderly with no young to support them for whatever reason, so some level of government support is necessary. You can’t just have old people dying in the streets of course.

Sometimes you gotta know when the parties over and it's time to leave.

Those people literally dug their own graves.

NIH / WHO put infertility at somewhere between 10% and 17.5%.

You've condemned a sixth of the world's population through no fault of their own.

Adopt some orphans.

George Washington chose to found a country instead.

Beethoven and Chopin wrote some music.

Queen Anne united a Kingdom, and Queen Mary II assented to the 1689 Bill of Rights.

Frida Kahlo painted some art.

Virginia Woolf wrote some literature.

Helen Geisel edited Dr. Seuss.

Rosalind Franklin helped discover DNA.

Jean Purdy helped develop IVF.

All infertile due to no fault of their own.

Perhaps you should consider moving out of the country, avoiding classical music, literature, and art, foregoing all DNA-related medical developments and IVF, and meditating on empathy as you do so.

These people were outliers and they could pursue their passions and contribute to the societies because vast majority of adults were rearing a bunch of kids.

The problem is that for the last few generations in the Western societies, everyone wanted to be a George Washington or Rosalind Franklin and decided to pursue their passion. Not enough people were willing to do boring work of raising kids. That is definitely not sustainable.

> These people were outliers

What part of 1/6 the population don't you understand? Is this ignorance willful?

> The problem is that for the last few generations in the Western societies... Not enough people were willing to do boring work of raising kids. That is definitely not sustainable.

Biology seems to have incentivized reproduction heavily enough that we're sitting at 8.2 Billion humans worldwide.

"The human population has experienced continuous growth following the Great Famine of 1315–1317 and the end of the Black Death in 1350, when it was nearly 370,000,000." - https://en.wikipedia.org/wiki/World_population

Wake me up when it actually starts shrinking.

Alternatively, if you think there's something you can do to incentivize reproduction more than sex, let me know, I'd like to be a first-round investor.

> What part of 1/6 the population don't you understand? Is this ignorance willful?

The 1/6 number is made up. Here's an example source: https://www.who.int/news/item/04-04-2023-1-in-6-people-globa...

The first red flag is they use the Newspeak "experience infertility".

If you look at the data sources, they're calling women (and men) with children "infertile": https://www.cdc.gov/nchs/nsfg/key_statistics/i-keystat.htm

Obviously there's a sense in which a woman who's had children and now can't is "infertile" (though FAR more than one-sixth of women experience menopause). But it's not the sense being used by you and your parent commenter in this thread.

> The first red flag is they use the Newspeak "experience infertility".

It's this very new language from approximately the 17th century. And if you think real hard, you might find that you're a person who's experienced things too. Wow.

> If you look at the data sources, they're calling women (and men) with children "infertile"

The phrase that particular source uses is "impaired fecundity" which makes perfect sense. No clue what you're on about. If someone is born with two legs and through some "experience" loses one, we might refer to that person as having "impaired mobility". Crazy.

What causes you to post such insanity? Isn't it embarrassing?

The page I linked to has a top-level section called "Infertility". It has a table with a column called "1 or more births". The data in the table say that a positive proportion of those women are infertile.

As I said the first time, there's a sense in which such a woman can be infertile and it is NOT the sense your parent commenter means.

> As I said the first time, there's a sense in which such a woman can be infertile and it is NOT the sense your parent commenter means.

I understand you feel that way. Perhaps you are just a person who is experiencing dissatisfaction.

The research seems clear and sensible to me. And wholly relevant to OP. You may want to mail your criticism to the authors.

But it's not like birthrate falling has been mainly because of infertility?

They would work until they couldn’t, and then die?

https://news.ycombinator.com/item?id=44088316

> it was your kids taking care of you when you get older

This oversimplification has never been true. Humans evolved in extended family groups generally between 30 - 300 people. And humans are far more promiscuous and willing to adopt chosen family than most will admit.

The nuclear family is a shockingly recent invention.

It doesn't negate the claim that parent made though. "Your kids" had a wider meaning (and still has in a lot of places) but the principle remains: an adult had to provide, and protect a limited number of (usually related) kids to be cared by those of them who survived later in life.

No. You've failed to get the point.

"An adult" didn't provide. All adults did.

That's not how it works unless you try to say that adults in general are interested in kids survival. This would be true but it's not what drives larger efforts, and resources allocation. For that there are always related kids which get the most of one's resources, and other kids which may get something sometimes. And there are your elders and others' elders as well. Actually, there are plenty of countries where pensions either not a thing, or too small even for basics. I lived in some of them and I dare to say I know what I'm talking about.

> Actually, there are plenty of countries where pensions either not a thing, or too small even for basics. I lived in some of them

And you left them for places with a stronger social safety net. Interesting.

Word. I haven seen so many misconceptions about our state here in these comments, planted in our consciousness by our capitalist system to justify its existence. This, that we don't naturally rely on mutually supporting each other, is one of them. That our elderly are useless and unproductive, is another one. That it will take people working until they are 70 and utterly worn out to provide the pitifully inadequate support our society provides our elderly and our poor, is yet another one. Such inhumane beliefs persist all while a tiny minority skim off a sizeable proportion of the the wealth our labor produces for themselves.

I think nearly all of it is starting with people not wanting to pay taxes (who blames them?) and reasoning backward from there. It doesn't seem like an attempt to have a consistent non-hypocritical worldview so much as an attempt to justify wealth hoarding which capitalism encourages and happily provides ideological tools for. Nevermind that by allowing ourselves to be split from each other and our extended family support structures, we are all becoming more vulnerable and in need of the very societal support some would rather withhold.

It's all incredibly short sighted and selfish.

>something humans have done since before recorded history

Inuits would leave their old out in the snow, and walk away. Just saying.

I looked for references. Found the following which cites three references across 5 decades. It indicates that this practice was 1) rare even before it ended in 1939 2) considered repugnant by many Inuit 3) an alternative to starvation when there was no other choice.

https://www.straightdope.com/21343302/did-eskimos-put-their-...

I'm not sure what you meant to communicate by sharing this thought. That 100 years ago hunter gatherers in the harshest inhabited climate on the planet made some unfathomably hard decisions and did horrifying things to survive?

I don't see how that has any relevancy to what we do today in the richest most industrialized society in the world.

Some tribes in Papua New Guinea prior to 1960 practiced occasional cannibalism. Doesn't mean we should be eating our neighbors today.

Wild that I should have to say so.

Steve is 75 and retiring. Quick! Barbecue him!

> You've created an impossible situation which will never exist

It can and does, albeit in slower motion (ie Japan, South Korea)

> why taking care of the elderly, something humans have done since before recorded history, is flawed.

Humans took care of THEIR elderly. The system was made to take care of THE elderly. Pretty sure most people don't want to see old people begging for food on the street but also prefer not to pay much to have it resolved (varies by country and culture)

> It can and does, albeit in slower motion (ie Japan, South Korea)

Read what he wrote again. The scenario he created (everyone works, then everyone retires) has never and will never happen. Humanity is more likely to be wiped out by a meteor.

> Humans took care of THEIR elderly.

Point me toward the non-human elderly being supported by the social safety net. We're all related. You just have to look back far enough.

> Pretty sure most people don't want to see old people begging for food on the street but also prefer not to pay much to have it resolved (varies by country and culture)

I agree with you here. People don't want to help others, and don't want to suffer the consequences of not helping others. People are conflicted creatures who suffer from a long https://en.wikipedia.org/wiki/List_of_cognitive_biases

> The scenario he created (everyone works, then everyone retires) has never and will never happen.

It can happen in a generation, if all of that generation decides to have zero offspring. This is why it is happening in slow motion. There are still people having kids but not enough for sustaining the current population levels.

> We're all related.

We are also related to bugs. Humans generally care for their very close relatives (kids -> parents -> cousins...) and emotionally care for the rest of humans.

> It can happen in a generation, if all of that generation decides to have zero offspring.

All of humanity has never decided to do the same thing ever. Society follows a https://en.wikipedia.org/wiki/Normal_distribution , and there will always be folks who decide to do other than everyone else. Oppositional defiant disorder is a thing. You're living in imaginary land.

> We are also related to bugs.

Yes. And many very intelligent people besides myself think that we should be taking better care of the environment and all the other creatures in it besides ourselves as well.

I mean, I literally said "economic theory", the basic idea is that you simplify the assumptions to make a point. That's literally what most of economics is!

In the real world, the assumptions are weaker and the dynamics are much more complicated than a toy model, but you can still transfer the same conclusions - in this example, that pension requires making babies and that without a good negative feedback mechanism, the system eventually collapses.

> In the real world, the assumptions are weaker and the dynamics are much more complicated than a toy model

1: Correct.

> but you can still transfer the same conclusions

2: Incorrect, see 1.

I live in Australia where individuals are expected to fund their own retirement, and the government pension is intended just as a back-up for those who are too poor to do so. Everyone has an investment account ("superannuation", or "super" for short) which is taxed at at a reduced tax rate, and your employer is required to pay 12% of your salary into it. There are many providers of such accounts ("superannuation funds") to choose from (normally your employer has a recommended fund, but you aren't obliged to use the one they recommend) – and if you really want to you can set up your own superannuation fund (a Self-Managed Super Fund or SMSF) in which case you can make all the investment decisions yourself (subject to certain legal restrictions–you risk legal trouble if you make non-arms-length investments, like invest your superannuation into your own business, but other than that you can put the money in whatever you like.)

So, lack of young workers is not an inherent problem – you can invest your superannuation overseas (most funds invest a certain percentage of the money overseas, but if you want to take the risk of putting 100% of your superannuation into international investments, that's allowed), so even if the Australian economy were struggling with lack of young workers, you could still live off the investment returns from other global economies which lack that problem. And the reality is that Australia is unlikely to run out of young workers, because even though we have similar problems with low fertility as many other Western countries (although significantly higher than most of Western Europe), we've also always had a relatively high immigration rate, so younger workers immigrating makes up for the insufficient births.

> in Australia where individuals are expected to fund their own retirement,

I'm looking at the official statistics, and this is not what they say:

The government pension is the main source of income for 47% of retirees vs superannuation's 33%. Moreover, the proportion of those relying on the pension has increased between 2020 and 2022 by 3 pts.

https://www.abs.gov.au/statistics/labour/employment-and-unem...

> The government pension is the main source of income for 47% of retirees vs superannuation's 33%.

Yes, but that’s because the current superannuation system was only introduced in 1992, and when it was first introduced the mandatory contribution rate was only 3% (as opposed to 12% starting this year)-so a lot of current retirees had limited super because it didn’t exist for a big chunk of their working life, and then even when it did the contribution rates were arguably insufficient. Younger workers (20s/30s/40s) generally have had much more money put into their super, so it is expected that by the time they reach retirement age, the pension:super balance will have shifted more in the super direction.

> Moreover, the proportion of those relying on the pension has increased between 2020 and 2022 by 3 pts.

That period saw significant economic and social disruption due to COVID-19, so I doubt that change is representative of long-term trends. If an economic shock causes a rise in unemployment, that can push people near retirement age into unplanned early retirement-and the people most likely to be impacted by that are likely to be the least well-off, who inevitably are more likely to rely on the government pension than their own retirement funds

> Pension is a Ponzi scheme.

It's most appropriately a shared investment scheme. Your pension money should not sit idle while you are building it. That money can earn a percentage in many ways and dividend reinvestment makes the fund grow massively.

> Retirement depends on having young workers.

Profits do. Retirement is going to happen regardless of how many young workers there are.

There is zero advantage to a society-level investment scheme and many disadvantages - mainly due to distancing "investors" from the investment which means that the goal of the system becomes profit only without any consideration for ethics.

> There is zero advantage to a society-level investment scheme and many disadvantages

Except we're using it and it works. It's demonstrably better than the previous scheme wherein when a business failed it could take the entire pension with it leaving thousands of people high and dry.

> mainly due to distancing "investors" from the investment

It puts me directly in control of the investment whereas before I had zero control and had to accept whatever the company administrator decided.

> which means that the goal of the system becomes profit only without any consideration for ethics.

Do you want to solve the retirement problem or ethics in investing problem? If you insist they both be solved by the same action then I think you're going to end up with a system that has _negative_ advantages and _everyone_ will hate.

> There is zero advantage to a society-level investment scheme and many disadvantages […]

The first advantage is they're generally a mix between tontines and annuities, which helps to mitigate longevity risk.

Pensions aren't a Ponzi scheme.

They just need to be calibrated that the years of pay-in and years of pay-out are balanced as to the ratio of the people in the age cohorts. If you have 10 people paying in for 40 years and only 2 people receiving pay out for 10 years then the system is cheap.

Except if you take a portion of the contributions and investment in incoming-producing assets.

Kind of like what the Canada Pension Plan (CPP ~ US Social Security) does.

Not all pensions are the same or created equal.

It depends on the system. In Holland they just abandoned this for a US-style "every man for himself" 401(k) thing. Luckily there are still parties fighting the implementation.

I don't think ponzi scheme is justified, it is too negative, it just makes no sense to actually accumulate all that wealth for so long.

> "every man for himself" 401(k) thing

It allows you to do that. In most cases there are various life index funds that operate the way a traditional pension scheme would and is likely the default option in any employer plan.

You can additionally add your own money outside of your paycheck and you can use the money inside of the fund to make your own investments. You are also allowed to take personal loans against your own 401k. Which is a generally overlooked benefit of the system. You pay interest on the loan but it just goes back into your 401k itself. You pay interest to yourself.

The great thing with a 401k is it's not industry dependent. If your employer or industry goes out of business you still have a lot of options to move your retirement to a new employer or use some of the funds to bridge yourself to a new line of work.

I used to hate it but now that I've used it I quite like it.

I prefer the old system because it's simpler (the last thing I want to do is manage investments) and it doesn't run out like a personal pension does. You just get the monthly amount as long as you live. Because it's a group scheme. Some people are luckier than others.

Unfortunately Holland has become very neoliberal and everything collective or social is frowned upon. That's really why they changed it.

> and it doesn't run out like a personal pension does. You just get the monthly amount as long as you live

It doesn't run out? What's this magic infinite money? It doesn't run out because when it runs out other people are working for you. It's a great system that exploits the young to benefit the old that didn't save enough. The new system removes the magic and you have what you saved.

The young also benefit from it later.

The people that live longer benefit from the ones that don't, but it's about reassurance, it's not an investment. If they had lived longer they'd have had that reassurance too.

> the last thing I want to do is manage investments

You are not required to. You can set your portfolio to be 100% mutual funds. Several exist. They have names like "Fidelity Freedom Blend 2045" or the "Blackrock Lifepath 2045." Your provider almost certainly has a default in this category they will pick for you if you signal no other intent.

> Because it's a group scheme

A 401k can be group or individual. It's your money in a special status that's allowed to be used for certain purposes before taxes. The proceeds are tax free under certain circumstances. It's entirely up to you what you do with that money including just stashing it into a fund and forgetting about it.

> and everything collective or social is frowned upon

There are advantages and disadvantages. Populations and circumstances change over time. With the world working to phase out petroleum it should be no surprise that Holland needs to adjust.

    > In Holland they just abandoned this for a US-style "every man for himself" 401(k) thing.

Do you mean the second or third pillar? Ref: https://www.pensioenfederatie.nl/website/the-dutch-pension-s...

EDIT: (added below)

    > US-style "every man for himself"

Also, the US system has (at least) two pillars: national pension (called "social security") and private, tax-sheltered savings as 401(k)/IRA.

The second. The first pillar I don't have full access to due to not living there all my life.

About the first pillar (national pension), Google tells me:

    > You are insured for the state pension if you live in the Netherlands and for each year you are a resident you accrue 2% of the state pension. If you have been in the Netherlands for the full 50 years prior to your state pension age, you will receive the full 100%.

Many highly developed countries used to have a second pillar (company-sponsored pensions, either defined benefit or defined contribution), but those are slowly fading away after adopting more neo-liberal economic policies.

Personally, I am OK to privitise/personalise some of your retirement pension risk, but not all of it. Large parts should still be guaranteed by the state. The real problem with privitisation/personalisation of retirement pension risk, most people are much worse than professional investors. Also, a huge portion of your retirement savings are earned in the last 10 years when your invested capital is almost peak. If there is an economic crisis during that decade, you are screwed. Can you imagine being 5-10 years away from retiring in 2007... then 2008 Global Financial Crisis happened? You will definitely need to delay your retirement by 5-10 (more) years. Awful.

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