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It's not a pyramid scheme because there's no promise of returns. One may pay $1,000,000 in social security and receive $0, but other may pay in only $10,000 an
by mywittyname 5y ago
It's not a pyramid scheme because there's no promise of returns. One may pay $1,000,000 in social security and receive $0, but other may pay in only $10,000 and receive $100,000 over their lifetime. People who pay into it will get $X, unless the surplus runs out, in which case they get a reduced amount proportional to the amount of money coming in.
A pyramid scheme guarantees returns, and those guarantees can, and will eventually, exceed the amount of money held by the scheme. Social security makes no such guarantee.
Social Security is basically a modified tontine. You pay in during your working life, and then receive payments at some age until you die. Like a tontine, the longer you live, the more payout you receive.
- rundmc 5y agoFully agree with the analogy but you disparage tontines! 49/50 US state workers pension will run out of money by 2033 because they are purely run as 'guaranteed' ponzi schemes. The exception is the state of Wisconsin which operates more like a tontine in the sense that the payments you can expect is adjusted based upon on the mortality of other members in the system. I know this because I am making progress convincing governments and supranational organisations that the only sustainable pension system is the one we are enabling through our platform at https://tontine.com https://tontine.com