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Because then too many people will not actually prepare their own pension. And sure, that is on them for being irresponsible stupid young people (i.e. young peop
by krastanov 5y ago
Because then too many people will not actually prepare their own pension. And sure, that is on them for being irresponsible stupid young people (i.e. young people), but then it becomes a societal / national problem when every old person is destitute, straining all other systems in the country. If I, selfishly, do not want to be surrounded by destitute old people that lower my quality of life, I have to ensure that there is some (national) system that ensures these people prepare a pension for themselves.
Also, on the more utopic/hippy views, it is just nice to help others, so why not institutionalize/codify helping others.
- neilparikh 5y ago> Because then too many people will not actually prepare their own pension. It is worth noting that if your goal is just to handle the people who didn't make wise decisions when young, the current system does more than needed, and there's a much better way to accomplish that. You can simply force people to save n% in a retirement savings account, managed by the government; ie. take the current system, but keep everyone's money separate rather than merging it into a common pool. This is how Singapore's Central Provident Fund works. The current system really solves 2 problems: people who choose not to save enough, and people who didn't earn enough to save enough. You can solve the 2 separately: the first with the solution mentioned above, and the second with something like a negative income tax. Now, the problem with separating the 2 is that there may not be enough political will for the second system, because it makes it obvious that the amount you receive in retirement is not in proportion with what you contributed. That's the case now too, but it's obscured by the structure of the program.