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Basically only works when you have a growing economy and a growing population. Both things are sort of not true anymore in developed nations.

alkonaut 9y ago
A declining/aging population is problematic but a stable one isn’t. And you need some buffers in the system to manage the variations in birth rates. I thought this type of system was the most common these days?
- hkmurakami 9y ago
  Most nations have been set up with growth assumptions. I think you're right that in theory a nation with stable numbers for both can sustain itself. However, we'd have to redo much of the infrastructure assumptions in place today [1], and currently I don't see any nations that are ready to take that plunge. [1] The only systems I see are either underfunded due to growth assumptions they haven't been able to hit, or are funded through natural resources that the country just happened to have. If there are exceptions I would genuinely like to know.
- RobertoG 9y ago
  A declining/aging population could be not a problem if there is an increasing in productivity at the same time.
  - MisterBastahrd 9y ago
    If wages were tied to productivity, that'd make sense. Workers today are vastly more productive yet lag behind when comparing wages to cost of living.
ineedasername 9y ago
Except the US has positive average Gdp growth in the range of 2%, and positive population growth as well.
- hkmurakami 9y ago
  Fwiw the last 10 years have an average yoy growth rate of 1.48%, which is a difference in magnitude great enough from 2% to point out. We have population growth fueled by immigration. If not for this the US would have population decline. This is what makes us very much an outlier amongst developed nations [1]. Despite this our pension funding situation does not look good. [1] Germany probably has strong net inflows of educated workforce from EU nations as well.
  - ineedasername 9y ago
    France, Germany, Canada, US, Australia... many or all of the most advanced western nations have positive avg gdp around 1.5 to 2% and positive population growth as well. These are not the primary factors behind failing pension systems. In nearly all cases it ends up that those in charge dont make the required payments. In my home state that is the issue: had the mandated payments been made there would be no crisis. The state broke its own contract and dissobeyed a court order to fund unrelated discretionary spending. The major private pension failures have been similarly aflicted, executive flee a bankrupt company with agregate golden parachutes measured in hundreds of millions but the pension fund was ignored with underpayments for decades. Our retirement systems are broken, and part of it stems from their own excessive costs, but there is no sinhle cause here, its a complex issue with complex causes, and shifting demographics and economic growth are only very minor factors. Bad policy, cynical politics and budget shenanigans, self interested executives, and simple incompetence and hobest mistakes all play the bigger part.

alkonaut 9y ago

A declining/aging population is problematic but a stable one isn’t. And you need some buffers in the system to manage the variations in birth rates. I thought this type of system was the most common these days?

hkmurakami 9y ago
Most nations have been set up with growth assumptions. I think you're right that in theory a nation with stable numbers for both can sustain itself. However, we'd have to redo much of the infrastructure assumptions in place today [1], and currently I don't see any nations that are ready to take that plunge. [1] The only systems I see are either underfunded due to growth assumptions they haven't been able to hit, or are funded through natural resources that the country just happened to have. If there are exceptions I would genuinely like to know.
RobertoG 9y ago
A declining/aging population could be not a problem if there is an increasing in productivity at the same time.
- MisterBastahrd 9y ago
  If wages were tied to productivity, that'd make sense. Workers today are vastly more productive yet lag behind when comparing wages to cost of living.

ineedasername 9y ago

Except the US has positive average Gdp growth in the range of 2%, and positive population growth as well.

hkmurakami 9y ago
Fwiw the last 10 years have an average yoy growth rate of 1.48%, which is a difference in magnitude great enough from 2% to point out. We have population growth fueled by immigration. If not for this the US would have population decline. This is what makes us very much an outlier amongst developed nations [1]. Despite this our pension funding situation does not look good. [1] Germany probably has strong net inflows of educated workforce from EU nations as well.
- ineedasername 9y ago
  France, Germany, Canada, US, Australia... many or all of the most advanced western nations have positive avg gdp around 1.5 to 2% and positive population growth as well. These are not the primary factors behind failing pension systems. In nearly all cases it ends up that those in charge dont make the required payments. In my home state that is the issue: had the mandated payments been made there would be no crisis. The state broke its own contract and dissobeyed a court order to fund unrelated discretionary spending. The major private pension failures have been similarly aflicted, executive flee a bankrupt company with agregate golden parachutes measured in hundreds of millions but the pension fund was ignored with underpayments for decades. Our retirement systems are broken, and part of it stems from their own excessive costs, but there is no sinhle cause here, its a complex issue with complex causes, and shifting demographics and economic growth are only very minor factors. Bad policy, cynical politics and budget shenanigans, self interested executives, and simple incompetence and hobest mistakes all play the bigger part.