Japan has been grappling with its demographic statistics with a sense of urgency, particularly regarding its declining birth rate. In 2023, the country...
A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors.
Meanwhile, the current pension system in most countries depend on a growing population to spread out the payments for pensioners over multiple workers.
Ponzi schemes collapse when there aren’t enough investors to sustain the dividends to be paid to the existing investors. Most countries’ pensions rely on an increasing amount of working age inhabitants to pay retirees and are now having issues paying out pensions due to the shift in demographics, that’s why many countries have been increasing the retirement age recently.
There are 2 solutions to this.
Increasing birth rates, this option is not sustainable in the long term but is commonly preferred for reasons mentioned below.
Migration. There are currently plenty of countries with a large working-age population and a weak economy. Letting those migrate would solve the demographic issue, but is political suicide.
Maybe this ponzi. Unfunded state pensions use workers contributions to pay current pensioners.
Less workers = less pensions.
That’s still not a Ponzi scheme even if it isn’t sustainable.
I think it actually fits quite well.
Meanwhile, the current pension system in most countries depend on a growing population to spread out the payments for pensioners over multiple workers.
Ponzi schemes collapse when there aren’t enough investors to sustain the dividends to be paid to the existing investors. Most countries’ pensions rely on an increasing amount of working age inhabitants to pay retirees and are now having issues paying out pensions due to the shift in demographics, that’s why many countries have been increasing the retirement age recently.
There are 2 solutions to this.