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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

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.

ilya_m 1y ago
> 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-unemployment/retirement-and-retirement-intentions-australia/latest-release#income-at-retirement https://www.abs.gov.au/statistics/labour/employment-and-unem...
- skissane 1y ago
  > 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

ilya_m 1y ago

> 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-unemployment/retirement-and-retirement-intentions-australia/latest-release#income-at-retirement https://www.abs.gov.au/statistics/labour/employment-and-unem...

skissane 1y ago
> 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