I believe it’s tied to your earnings in the US though, which it isn’t in the UK.

I also have a number of qualifying years in the UK when I didn’t work, and for decades you could buy a year contribution for about £150. The payout is £12,500 per year.

Ponzi schemes always make current payments out of current inflows. The first 10 people get paid from the inflows from the next 100 people who get paid from the next 1000 people and so on, until you run out of people to sign up and the last group is left holding the bag. This is how Social Security works in the US because it started out by making payments to people who never paid in and was premised on the early 20th century fertility rate of >3.5 instead of the current ~1.6 to keep the system from collapsing, which is why the "trust fund" is running out of money -- it never had enough to cover future payments to begin with.

Whereas having individual years when the fund pays out more than it collected in interest is not a problem as long as that's not what happens on average.

> One time out of five, the consequence of that investment strategy is 'The market had a crash and I lose everything'.

Which is why that strategy doesn't actually beat the market. Keep using it for 30 years and you're bankrupt.

Whereas if you put your money in a major index 30 years ago and left it there, or even 50 or more years ago, what result? Are you even in a bad place if you put all your money into the market in 1926 and left it there for 100 years?

Well, it could absorb it because its horizon is past the depression.

Let's not forget, CPPIB underperformed a passive benchmark during the Great Financial Crisis and lost 18.8% in FY09.

Not Canada, but Bank of Japan and the equivalent JP pension fund have juiced the crap out of domestic JP stocks with ETF purchases.

The gravitational field of indexes that large is one of the reasons why it works. The stock price of a company will generally increase when it's added to a major index because there are now so many more people trying to buy it as part of the index.

The risk is nominally that if you ever wanted to move a fund that large into some other investments, the act of selling would lower the price of the assets in the fund. But that's what happens no matter what you invest that amount of money in. But then widely distributed whole-market indexes would tend to mitigate that.

The real problem with this is that it disconnects what people invest in from the fundamentals of the companies. Promising companies don't get as much investment if they're not in an index, and mismanaged companies get too much if they are.