How Europe waged war on young people to pay for pensions
https://www.telegraph.co.uk/money/pensions/state-pensions/how-europe-went-to-war-with-its-pensioners/
Posted by insomnimax_99
How Europe waged war on young people to pay for pensions
https://www.telegraph.co.uk/money/pensions/state-pensions/how-europe-went-to-war-with-its-pensioners/
Posted by insomnimax_99
36 Comments
>#How Europe waged war on young people to pay for pensions
>__Countries are taking drastic action to rein in spiralling state pension bills – could Britain follow suit?__
>When King George VI signed the National Insurance Act, the state pension became the foundation of British retirement.
>Since 1948, its universal payouts have rescued millions of people from a retirement of abject hardship – and undoubtedly some from an early grave.
>Before the ink had dried, however, an eye-watering bill was looming. Its architects confidently forecast an outlay of just £501m by 1978, but none foresaw future generations quitting the coal mine, having fewer children and living well into their 80s or 90s.
>When 1978 arrived, the true cost had spiralled to £7.6bn – around 15 times above budget. By the end of the current decade, fuelled by the triple lock, it will hit £181.2bn, an increase of over 25pc in just five years.
>The problem has also become entrenched across Europe and governments are inadvertently pitting old against young in a desperate battle to balance the books.
>Older generations, who feel they’ve earned their payouts, can watch on contentedly – safe in the knowledge that their pensions will keep rising – as their governments ratchet up retirement ages for younger generations and the contributions they must pay in.
>But across the divide, many young people – now expected to work for longer to foot the existing pensions bill and losing faith that the state will be able to afford such payouts by the time they retire – are taking to the streets.
>A bubbling resentment threatens to spill over.
The increasingly urgent question is how Britain, facing its own huge bill for pensioners, will solve this problem. Can it take inspiration from its European neighbours?
>__Sleepwalking into retirement__
>After an unprecedented post-war baby boom, decades of falling birth rates and rising life expectancy, a fifth of citizens in the UK and Europe are already over 65.
>By 2050, this will hit one in four in the UK and almost one in three across Europe.
>Two thirds of EU residents also have no pension savings, leaving up to 170 million people sleepwalking towards a retirement on state-sponsored benefits.
>European countries have attempted their own solutions with varying degrees of success.
>For some, the simplest and fairest way to cut state pension spending was to increase the age at which people can claim it. With life expectancy increasing into the 80s, these nations argued that people didn’t need to retire at 60.
>In Scandinavia, the state pension age is now linked to life expectancy. In Finland, it is rising to 65 and Denmark has already passed a law to raise it to 70 by 2040, while in Sweden it will soon hit 67 for those wanting to claim a payment without any reductions.
>All three have a formula for increasing pensions each year, based on wages and inflation, and Sweden refuses to pass on any increases in times of economic decline.
>Crucially, none of the three governments had their hand forced by the triple lock and opposition was muted at best. Protests were small-scale and calm, bordering on polite, while the threat of strikes never truly materialised.
>It’s a path that successive governments in Britain have also walked, beginning with equalising women’s state pension age with men’s from 2018. The now-universal age then increased gradually to 66 in 2020 and will take another two years to hit 67 in 2028. Even the rise to 68 is not expected to be complete until 2046.
>But this has done little to rein in costs so far. In 2018-19, state pension spending was £96.7bn, but it will hit £154bn next year – an increase of almost 60pc since equalisation.
>The key driver is the triple lock, which continues to hamstring any politician who might want to eradicate it and still have a chance of re-election.
>Introduced from 2011 and widely believed to be the only such measure in Europe, it guarantees that payments will increase by the highest of wages, inflation or 2.5pc and no government has looked to scrap it since.
>By 2030, the measure will cost £15.5bn a year, according to the Office for Budget Responsibility.
France hits a roadblock
>Far from raising their state pension age, the French hold the distinction of being one of the only European countries to have reduced it. In 1982, as part of a radical left-wing agenda, President François Mitterrand decided that it should fall from 65 to 60.
>France now has one of Europe’s lowest retirement ages at just 62, and hands almost 15pc of its GDP to pensioners.
>Faced with an unsustainable bill, politicians decided something finally had to give. In 2023, President Emmanuel Macron passed reforms to increase the age to 64, using a constitutional clause to avoid a vote in parliament.
>Trade unions responded with 14 days of protests, attracting well over a million people nationwide, and at one protest in Paris, the Place de la Concorde was set alight as over 120 people were arrested in clashes with riot police.
>Macron’s government narrowly survived a no-confidence vote from furious parliamentarians. Late last year, Prime Minister Sébastien Lecornu eventually postponed the changes until after the 2027 presidential election – a move expected to cost more than €2bn.
This will definitely be one of the key questions to figure out going forward. As now 80+ average age is normal, e.g. in Madrid 85 is the average life expectancy, the books are really difficult to balance if you contribute 30 years of your 85. I think in the next generation we will see a drastic increase of pension age, probably even into the 70s in some cases.
This will definitely be one of the key questions to figure out going forward. As now 80+ average age is normal, e.g. in Madrid 85 is the average life expectancy, the books are really difficult to balance if you contribute 30 years of your 85. I think in the next generation we will see a drastic increase of pension age, probably even into the 70s in some cases.
Already know I’ll be working till 75 even after retirement at 67 or so (flexi-jobs). Just to pay energy bills and gen X pensions (I’m early millenial).
The stupid thing is that these flexi-jobs actually take jobs from younger people and give employers loopholes to not pay good wages to people actually looking for jobs at 30 or 40 or 50.
It’s a big pile of ****.
Is waging
I feel like most people focus too hard on demographics and on “no way few younger people can support a welfare state filled with elders” premises. The cold hard truth is that western society already produces more than enough wealth for all of us not to have to slave away our entire lives. This is also something that’s getting progressively more obvious as automation becomes increasingly more prevalent. The grand issue is the way resources are allocated and distributed. Compounding interest and rampant market capitalism is creating a class of ultra wealthy whose families will never have to work a day in their lives and the erasure of a middle class (whatever that is) that is owning less and less assets
The real issue is that most European pension systems were designed for a completely different demographic reality. Longer life expectancy + low birth rates were predictable, but reforms were always postponed because they’re politically unpopular.
I think a lot of European redditors don’t really understand how our tax system and economy work and just parrot what they hear from Muricans. I’ve seen a bunch of comments where people just say “just keep raising taxes and everything will be fine”.
France (for example) already has among the highest taxes and social welfare (heavily influenced by pensions) spending in the world. And any effort to cut that spending results in massive riots. The problem is that for the last 20+ years the French (and generally European) economies have stagnated badly while the US and China have raced past. Europe is flogging a dead horse. Trying to keep raising taxes and adding more regulations to already stagnant and decaying companies. Eventually all our companies will die and we’ll have no one left to tax.
Sources:
https://www.statista.com/chart/24050/social-spending-by-country/
https://www.reddit.com/r/EconomyCharts/s/n6dtovc4E3
Lmfao forget it. If you honestly believe there will be any pensions left for you when you think its going to be your turn then you are going to be in a serious crude awakening when you realize you haven’t saved anything once it gets rug pulled – and it will because it’s unsustainable.
One of the many funny things about this pyramid scheme i’ve ever seen is the fact we genuinely convinced people bringing in millions of fiscally negative net dependents would help alleviate this burden lmaoooooo
And yet our societies have allowed for parasitic and non-contributing multi-billionaires (soon trillionaires) to exist.
The way pensions will be allocated will change. I think there will be more need for people building up their own pensions to a certain degree in the future. The way it’s done now, is no longer feasible. I honestly don’t think my generation and I will have a pension like they exist now. I’m investing part of my money to make sure I will be able to retire on my own terms in the future.
Young people are effectively financial slaves to the pensioners. The old consistently vote for policies that maintain their generous pension/benefits, it doesn’t matter if the economy is doing poorly, their benefits never take a hit because they force working people to pick up the bill.
With birth rates crashing, young people will never be able to vote in large enough numbers to fight against this parasitic relationship.
It’s because the companies making billions out of their workers should be bearing a lot more of the bill.
You know they are slacking when some company monthly pay cheques are smaller than some currently paid out pensions.
It’s not the earlier generation’s fault – it’s just another symptom of the growing wealth inequality within our society.
If companies and the ultra-rich paid their fair share, this would not be an issue.
We really need to be asking if it is ethical for any company to be making billions every year?
Funny for the Telegraph to be saying this when that’s consistently the platform they advocate for here inside the UK. Where’s this criticism when it comes to local UK policies?
Must have been nice for those who retired at 55 and got to enjoy retirement.
Right now money flow in one direction – up. We need tax structures which makes billionaires impossible. After first 100 millions, further wealth acquisition doesn’t make sense.
As someone younger than 40 I’m fully prepared to retire on death, this is a worldwide thing but yes, turbocharged in EU. A lot of social policies *could* come into place but probably not from the current generation? The 60+ crowd will hold on to dear life, quite literally, to the existing pension plans and their precious home/asset valuation, before even thinking that another way of organizing society is possible at all.
I’m in my mid 20s – I’m just assuming that the state pension won’t exist by the time I hit retirement age and planning accordingly. It’s so utterly unsustainable that it’s doomed to collapse in some form.
If it’s still around then it will be a nice bonus, but I’m not counting on it. Luckily, my employer has an extremely generous defined benefit pension scheme with a retirement age of 62, and I’m putting money in a separate pension pot on top of that.
Unfortunately, lots of retirees and soon to be retirees don’t have their own private pension pots and therefore are/will be dependent on the taxpayer. The UK only introduced auto-enrolment in 2012 so there will be a lot of people before then who never saved anything, expecting the taxpayer to support them. But the taxpayer is becoming overburdened, which is only getting worse as birth rates decrease and dependency ratios increase.
Im not confident in any type of state pension existing in the future, if it does it will not be as generous or accessible until you’ve one foot in the grave.
Unless you want to be working into yours 70s/80s everyone should be saving/investing regularly, owning your own house in retirement is a massive benefit to have as well.
The general trend is that over the last 30 or so years, all benefits for working people have slowly shifted to pensioners.
People went into retirement, the budget was out of balance, and to compensate benefits for working people were diminished but touching pensioners was a taboo.
Guess who the largest voting block in history are… Sometimes it feels like 2 wolves and a sheep voting on what’s for dinner. Year after year statistics show that our pensioners are the wealthiest in the world. But they still think they should get more.
Economy as Ponzi scheme
on one hand I know my grandma receiving pension 1.5x more years (and counting) than she worked in her entire life is not sustainable… on the other hand I dont want to be 80 or even 70 and still go to work. and if my grandma wasnt able to retire I am not sure what kind of job she would do where she could keep up. I feel like being old is scary enough without the level of poverty lot of us will experience once we get there 😬
I understand that I won’t be able to retire like my grand-parents did in their late 50s. They spent their 60s-70s-80s chilling, shaping bushes in their garden and drinking lemonade in their veranda all day. Even though I make more than they did…
I plan on turning myself off once my body and mind start feeling like it’s the end of the road. I’m expecting it to come around once I’m in the 45-55 years old range. I made my peace with it.
My finances are doing good because I don’t have kids. I’m not bringing kids into this system just so the richest parasites can keep this up. This is how I revolt. A lot of my friends and colleagues feel the same way I do. We all know what’s coming.
waged? Past tense? It’s ongoing and will continue because changing this pyramid scheme to something else is a political suicide and noone wants to ruin their career over it. Only something like Covid 2.0 has a chance to “fix it” for a bit.
And for some reason young people in France are protesting against raising retirement age. They should be fighting to raise it so that each of them don’t have to pay pensions for 3 pensioners.
Less kids are being born->fuck young people over->even less kids are being born->profit?
This wont end well
Wages*
Fuck off with this rhetoric. I’m not willing to touch my grandfathers pension. I’d be more than happy to have large corporations to pay more to do business with Europe.
Young people must fight for mantaining pensions.
Their real future will depend on them.
Somehow some people make them believe that if that money don’t go to pensions it will go to them, plus: in a few years they will not be in the young ones anymore.
Well not a bad idea. But I’m done sharing my data with the US.
I’d also argue that, in case of Switzerland, even when there are a lot of separate pension funds, the matter of choice comes down to the employer, not the employee. Meaning that the employer could get a cheap provider while not caring about stupidly high fees and the end return on investment because they are not the ones getting the pension, they are only the ones paying for it
I’d love to see a free market there where the pension fund leeches would get exterminated for their basically negative return when adjusted for inflation
I personally will always opt for the lowest amount paid into a pension fund and will much rather invest a lot in my personal portfolio that is not playing with fire
The cash-flow is literally the same as in a ponzi-scheme. It is no surprise it is not sustainable
People from Europe please be aware that the newspaper this article is from is anti Europe and pro Oligarchs and the United States. Most of the stuff they put out definitely learns a particular direction and if you’re not aware or careful you may be subject to heavy propaganda in a subtle way you may not realise it.
As an example in the UK this newspaper is nicknamed the Torygraph. The Tory’s (Conservative party) are the right leaning twats that made us leave the EU on a ‘non binding’ referendum.
The worst is, that young people, who have to contribute a HUGE amount in taxes to pay for the retirement benefits of the older people right now, that save from the measly bits of their own income that they have left after paying taxes and rent and food, to cover their own expenses later in life, are double punished.
Huge capital gains taxation schemes are rampant throughout most of the EU, and only increase the percentages, making it almost impossible, and certainly not worth it, to save for yourself. Furthermore, anybody that saves nothing, gets a cushy stipend from the government, paid with your taxes.
The system went too far.
Hateful rhetoric.
The Telegraph is a hard-right publication that doesn’t care in the slightest about young people *or* pensioners. This is just agitprop constructing a consensus to destroy our pension system. Resist and expose generation wars propaganda.