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Pension plans are always too optimistic, and in this case, being optimistic is not at all a good thing. It’s actually getting the situation worse and, if nothing is done about it, it’ll be impossible to make the work force pay the pension for the huge retired population.
During the 80′s and 90′s we learned in school that European countries’ population pyramid had clear signs of development, because it had low birth rate and high life expectancy. Opposed, of course, to those from Brazil at that time, which was pretty much triangular, especially in the poorest regions.
This is obviously a problem as much more children are being born and dying, due to lack of education of the parents (that have dozens of children rather than a couple) and complete lack of health care. They were adopting the R-selection (as insects and lower organisms), where the more children you have, the higher are the chances of having grandchildren (and so, propagate your genes). It may sound terrible, but if you actually go there and talk to those people, that’s what they say. If you say you only have two children they think it’s an absurd, asking: “what would you do if one or two die?”. It’s not lack of love for all of them, it’s the hard truth they have to live with.
Now, terrible as it is, let’s see the other way around. In a high educated society, with excellent public health care, you normally see couples with none, one or at most two children. Seeing three is ok, but four is an absurd. How can you cope with all of them? Imagine the cost of childcare! (Note that this is no problem for those that have 15 in the situation above). What happens is that, with time, less children become adults and the number of retired people get bigger than those that pay for their pensions.
You may think that you (retired folks) have paid already your public and private pension in the past, but truth is that both the government and the banks already spent your money on something else (probably paying the pension of your parents). They never think soo long term as they ask you to. They force you to think on your own pension when you’re around 30 years old but all that money is being re-invested, lost and getting money from the government to pay the bill. Government money (from your tax and pension payments) were actually to pay other bills they had in the past, and they hope they’ll have money in 30 years to pay yours.
The big problem is that, today, the number of employed and retired people are still similar, but in 50 years it’ll be very unequal. With better health care (as we all expect), with stem cell research, gene therapy, cloning and other wonders of modern medicine we’ll probably be immortals by the end of the century. How can a small group of people between 20 and 65 years can ever pay for the pension of 65 until 200 years old? We don’t have to go so sci-fi, nor so distant in the future, some predictions are telling that the size of the work-force is going to be much smaller. Either the pensions payments go up or it’ll be impossible to pay up.
Have more children?
Until now the answer is “Have more children!”. Lots of couples in “baby-age” nowadays are having more than three children. They do it because, in developed countries, it’s cheap. Health care is free, schools are free, medicines and most services are free too. Who is paying for that? All of us. What happens with having more children is that, not only the work force is paying for the pension of the old, but also for the joy of the young. If it’s already a disaster to rely on such a small work force to pay the pension, how fair is it to demand them to pay for the young too?
But there is another, even bigger, question: Isn’t the population already big enough? Can we ever give decent food to every single living being (including animals, of course) that already exists in the world? Do we really need more? Shall we let people kill babies in China with the one-child policy while we have joy with our 10 children? If we really need those babies, shouldn’t we be adopting the “unwanted” Chinese, Ethiopian, etc?
Well, I particularly don’t believe in cheap charity. As my mother always said (and stuck for life in my mind): “Give the fishing pole and teach them how to fish”. So, I still think we should promote education and health care for countries in need so they can also have a population pyramid like the developed countries, but the policy of children, pension and taxes has to change. Of course, education and health care do take some time to evolve, and the children on those countries today won’t benefit from that, so plain old charity IS also fundamental to help those regions.
Managing the retirement age
People’s health is better today that it was 30 years ago. More and more people today retire older and older (quick Google for “increase retirement age” and you’ll see), and some countries are even increasing the official retirement age. That helps a lot, of course, but it’s only temporary and can work against the people. What happens, for instance, if the average retirement age decreases from one year to another? Would the official age reduce too? Is it fair for everyone, between one year and the other? I don’t think so.
One possible solution is to provide incrementing retirement payments, proportional to age and external remuneration. Say I turn 55 and, because of health problem, I need to reduce my work load by one third. I should be able to get one third of my retirement and keep on working, until I need another break and get, say, half of it by the age of 65. I could have gotten the full amount, but because I’m still working (or getting funds from elsewhere), I only get the amount proportional to what I was earning before and am now.
In numbers: With 55, I’m earning 60K a year. I have to work only 2/3 and therefore get only 40K. My pension is total of 30K, and 1/3 is 10K, so my new salary is 50K. With 60 years I need another break, so my new salary is 1/2 (30K) plus 1/2 of my pension (15K) = 45K. If I stop completely, I’ll only receive the 30K or my pension. Of course, if you want more you can always make a private pension plan and trust your bank won’t go bankrupt in the next 30 years.
Why this is fair?
- If you’re still working full steam you should not get money from the government.
- If you still want to work but can’t full time, you should get a proportional help from the government, but only what the government can afford to pay
- If you can’t work at all, you should receive the full amount, exactly what the government already pays you today
This is just an example of how things can be worked out, not intended to be extensive not exhaustive. There are plenty of room for good ideas, we just need to get people talking about the alternatives rather than only thinking about how to get MORE money.
Why is retirement SO important?
Simply because there is just too much people in the world. Malthus would say: “Kill’em all”. I’d rather say: “Don’t let them be born at such an enormous rate”. If the solution for the future recession is having more babies, we’ll get ourselves into yet another one, much worse, in the next generation, like a snowball.
We have to stop having babies right now, deal with the consequences right now and hopefully in the future, our grandchildren will be better off. According to the CIA, the world population has just passed 6.7 billion people. With birth rate at 20/1000 and death rate around 8/1000 (same source), it’s not going to lower so soon. Raising 2% per year and with mortality rate extremely lower than in nature (which varies a lot, but seldom reach 0.8%), it’s very likely that in a few decades we’ll be the only animal on the planet. In a few centuries maybe the only living being (if you can say so).
Will we discover how to do photosynthesis with melanin? Or will we become cannibals?
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