Text 4653, 103 rader
Skriven 2010-02-06 14:17:56 av Robert Bashe (2:2448/44)
   Kommentar till text 4623 av Ward Dossche (2:292/854)
Ärende: Age
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Ward Dossche wrote to Dale Shipp on Saturday February 06 2010 at 09:02:

WD> Pensions here are different than in other places. The fund does not
WD> run dry even if one has exhausted his/her contributions in it.

Of course not.  But that's the justification for a government pension plan
being compulsory, isn't it?

WD> It's something like, but don't take this as a general rule, 66% of the
WD> last salary provided one has at least worked 20 years or so.

;-) Do people still believe that in Belgium? We had something like that too,
until the government found that the "rollover" financing system didn't work
after the older people started to outnumber the younger workers paying into the
plan.

Since then, the age limit has been increased and the forced contributions have
too. Plus the government has to make up the shortfall with tax money every
year. The result is that you pay more and get less - the pensions here used to
be somewhere near the percentage of the last salary you mention, but that's
history now.

And there's no end to this as long as the financing system stays unchanged,
with no provision for a capital-based fund.

WD> Pension can be had from age 60 on I believe. So if you live until 100
WD> and you worked 40 years, you will also get 40 years of pension.

Whoa! I agree with the first sentence, that's the same as in Germany - however,
you have to be disabled to retire that young on a full pension, _and_ you may
not earn more than a certain amount in addition to the pension until age 65.

The second sentence is, however, surely wrong. Sure, you draw a pension for the
rest of your life, but the _length_ you draw it has no relation to the length
of time you paid into the system (the _amount_ does). If it did, many very old
people in Belgium would suddenly find themselves destitute, without a pension
or other income.

WD> Now you understand the contributions made during those initial 40
WD> years of work do not compensate for the next 40 years.

Not the incompetent way governments "manage" the money. However, if the money
had been invested in a private insurance-based pension, the person in question
would draw a pension much larger than that paid by the government. This has
been worked out several times here in Germany. The current return on pension
contributions is even _negative_, i.e. you get back less than you put in. I'm
lucky in that respect, since in my age group, the return amounts to something
over 4% - still not a really good rate of interest on the money originally paid
into the system, but better than a loss.

WD> The government makes up for the difference...

No, the government uses tax money (_your_ money) to keep the bankrupt system
afloat. It has to, or risk a revolution.

WD> ... that is considered an advantage which you're getting, therefore
WD> they're limiting your salary-earning possibilities because you're
WD> already in the advantage.

Some advantage. Force you to put money in a money-losing scheme and call it an
advantage when taxpayers are forced to keep the scheme afloat because of
mismanagement.

WD> When not doing that, everybody aged 60 would get their pension and the
WD> next day try to do something full-time paid on top of that pension.

Which is why the Germans also cap added earnings until one reaches full
retirement age. Although nobody except disabled persons can draw a government
pension at all before that.

WD> That would create unemployment. So by limiting employment by
WD> pensioners, employment is created ... in the government's POV.

;-) The government's POV is to take as much as possible, give as little as
possible and call that an "advantage".

WD> My dad was a railroad worker ... he worked for 35 years before being
WD> forced into retirement at age 55. He's 89 now, you can do the math.

I doubt that he had to do on the government pension alone. He probably gets a
pension from the railroad as well - if he's lucky, he was a tenured worker
(Beamter) as used to be the case in the German railroad system, and thus gets a
fair amount of cash for that alone.

Aside from that, government workers - and I assume that applies to your Dad -
are also forced into early retirement in Germany. The only reason that is
possible is because the company or the government (depending on the nominal
employer) agrees to pay the pension from that point on. Voluntary early
retirement at that age is impossible unless you have the money to finance
yourself until you reach official retirement age.

Please read the above paragraph in the light of the fact that many people have
_two_ pensions: one as a result of contributions into the compulsory government
system, and another from their former employer. We shouldn't confuse the two,
as they are financed in completely different ways.

But in a word: the government doesn't "give" you a cent you didn't pay for in
advance, one way or another.

Cheers, Bob

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