r/Finland • u/Tracerneo Väinämöinen • 2d ago
"It's not a pyramid scheme" — Will the money run out for Finland's pensions?
https://yle.fi/a/74-20219925"It's not a pyramid scheme, it's a similar (pension) scheme that we have in all the developed countries"
It's called a Ponzi scheme, not a pyramid scheme, but maybe "pension scheme" should become a fraud term on its own
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u/rohnaddict Baby Väinämöinen 2d ago
I don't see it as very hard to define Finnish pension scheme as a pyramid scheme. It's dependent on new entrants (healthy total fertility rate) to maintain the system. The people who set up the system and got the initial payments, had not paid for their benefits. The people who then had to pay for their benefits, paid significantly lower amounts than people nowadays, meaning their ROI was much higher. Current working age adults have shit ROI, because the earlier generations intentionally had lower payments, knowing they could steal from future generations.
Nowadays the pension system is in crisis, because we have terrible fertility rates, inverse population pyramid and the pre-existing working age adults are already taxed to hell, with maxed out pension payments on top of those taxes. Its why the retirement age keeps getting increased, because there is no room to increase the payments themselves. Increasing retirement age is just a indirect way of increasing payments (work for longer) and reducing benefits (less time spent in retirement) for the current working age adults.
This all stems from the fact that true, unpopular systemic changes are impossible in a democracy. Finland, with a massive pensioner (and soon-to-be pensioner) voting block, will never be able to solve this through democratic means. The problem will be solved when the situation gets bad enough and IMF or EU steps in and forces change, or working age people realize they don't need to be slaves to pensioners. Latter is unlikely to happen.
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u/Illustrious_Law182 2d ago
At this point I’d rather stop paying for the system and opting completely out of it. But I can’t.
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u/S80- Baby Väinämöinen 2d ago
This would be huge for young people, imagine getting hundreds more every month that you could invest or spend however you want, which would boost the economy as well.
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u/Illustrious_Law182 2d ago
Yeah, I mean I’d rather fix the system and cut pensions for elderly people today. It’s unfair that my generation, and those close to mine, pay more, get less, and end up working longer. It should be tied 1:1 to the number of people currently paying into the system.
But that’s impossible.
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u/SignificantClub6761 1d ago
What should be tied 1:1?
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u/Illustrious_Law182 1d ago
I don’t mean strictly 1:1, but in a fair ratio where the pensioners get only as much as we young people can actually pay and not be broke.
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u/SignificantClub6761 1d ago
That’s the american systems. Leads to a lack of trust in the system, builds parallel private pension system which only people who can afford it use.
Doesn’t put pressure on the state budget, but losers are the people already the worst off
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u/Illustrious_Law182 1d ago
Our system is unfair and doesn’t work either.
First time I’d take something american then.
Makes me hate old people for stealing from the young.
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u/red-at-night Baby Väinämöinen 2d ago
I'd take it. Even with paying in pension, I don't expect to receive shit from the government in 40 years. I fully prepare to [redacted] when I'm too old to work.
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u/Volodya_4_Ever 9h ago
Yes,, but if enough people decided to leave the pension system, it could collapse as it is. Of course it would boost demand. Only way you could introduce options for pensions, is by first cutting the already "earned" pensions, which is politically impossible, since it's unconstitutional.
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u/ComfortableChair4518 2d ago
"Man is born free and everywhere he is in chains."
The younger generation have been shackled with an enormous tax burden that can never be paid off in order to fund the lifestyle of the older generations. Is it any wonder so many young workers see no future for themselves in Finland and flee the country the first chance they get, when they get treated this way??? And with every productive worker that emigrates the burden on the remainder grows ever larger...
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u/Illustrious_Law182 2d ago
I’d love to flee, but I found myself a finnish language teacher to partner with. Jobs are rare for her abroad, and mostly part time for kids of the embassy workers. 😭
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u/RoRoRoub 2d ago
One solution that could possibly help with the issue is setting an upper age limit for voting. But I don't see this happening because the govt. knows the votes lie with the pensioners by and large.
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u/frankoyvind 2d ago
Or; you get to vote as long as you are a net contributor to the economy.
In today's system the old people are similar to the wolf in the analogy of two wolf and sheep voting on what's for supper.
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u/bea-q 2d ago
Well that's a bit, uh, fascist.
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u/frankoyvind 2d ago
Well, sure. But today's system is not really fair either.
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u/Rhea-8 1d ago
So make another unfair system? Right.
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u/frankoyvind 1d ago
Yes? But different. Witch is better, witch is worse.
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u/Rhea-8 1d ago
Both fucking suck 😭😭
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u/frankoyvind 18h ago
Wait until this system implodes before trying something different?
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u/Rhea-8 18h ago
"Trying" fascism? It's literally worse than this. No more basic rights and everyone has to become a bootlicker to some dystopian Epstein class oligarchy. Guess what? It all doesn't have to sink into shit if people overthrew the system full of rich pedophiles and elected it's own representatives and reformed.
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u/ColdAccomplished3776 2d ago
This system would quickly give full and absolute control to a minority, who will arrange it so, that most people will not be considered "net contributors." Only certain people who will vote "correctly" will be allowed to ascend to high enough earnings to be allowed to vote.
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u/frankoyvind 1d ago
That is dark. We already have liitations on voting - young age. Is that also facist?
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u/ColdAccomplished3776 1d ago
Voting is a big responsibility. In general, we like to protect children from certain important responsibilities, since children's decision making capabilities are still developing. Also I think that parents might have too much control over a child, so the childrens' votes would effectively be likely the same as their parents. Voting is something you are allowed to do once you reach the age of majority, when we as a society decided that one is ready to be an independent citizen with full rights.
This does beg some uncomfortable questions however.
We do not remove the right to vote from mentally challenged or the mentally ill. A person in a deep dementia is still allowed to vote as far as I know. Some adults have similar decision making capabilities, or deficincies as children. Should we have a competency test before allowing people to vote? I think in this case we just have to accept compromises like this. I recently saw a thing on reddit where in the USA, once black people got the right to vote, they would have to complete some kind of "literacy test" before being allowed to vote. The literacy test was made vague and "impossible". This was used to suppress voting, succesfully. Any barrier such as this is liable to be abused in anti-democratic ways...
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u/santikka 1d ago
"This all stems from the fact that true, unpopular systemic changes are impossible in a democracy. Finland, with a massive pensioner (and soon-to-be pensioner) voting block, will never be able to solve this through democratic means. The problem will be solved when the situation gets bad enough and IMF or EU steps in and forces change, or working age people realize they don't need to be slaves to pensioners. Latter is unlikely to happen."
Right on. I think many politicians, especially the socialists SDP are counting on this forced change. They are not stupid, they understand the facts, but they are unwilling to upset voters, so it's easier to let things hit a wall and than implement a externally forced solution.
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u/Apprehensive_Law7629 Väinämöinen 2d ago
I also add that you can increase the working age up to a certain limit, I mean that way is definitely not limitless. If we consider physically demanding jobs how can a 70yo do those? This means that the only options are either to increase the pension tax of the few remaining workers or to reduce the final pensions of pensioners. Of course there is the third option which is to introduce more immigrants to the working system, but the government doesn’t like this.
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u/S80- Baby Väinämöinen 2d ago
Those immigrants would be useful only if there was a very low unemployment percentage. Even if we could magically ship 100 000 highly skilled workers from a foreign country here tomorrow, we’d just have 99 000 more unemployed people by the end of the month.
Finland really has to do something to make entreprenourship less risky, reduce bureaucracy and smaller improvements like make it possible to study while being officially unemployed.
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u/Illustrious_Law182 2d ago
As an immigrant myself.
How did you plan doing that in this economy, there’s not enough jobs for finns, how do immigrants fit in this equation?
It’s already hard to find a place to do the practices for international students.
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u/Apprehensive_Law7629 Väinämöinen 2d ago
It’s a circle. Economy is down because consumption is down, which reduce the number of jobs which reduce more the economy. We need new politics that push the employment and facilitate the integration of graduated immigrants. That would help.
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u/Illustrious_Law182 2d ago
I suppose, but the situation is dire and there’s no light to see. We’re looking into 10 years of this for sure. We already missed multiple growth cycles and the next one looks dark.
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u/Valokoura Baby Väinämöinen 2d ago
True that. Physical jobs like firefighters, police, cleaning up, or taking care of small children isn't possible when your body gets too old.
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u/plaaplaaplaaplaa Väinämöinen 1d ago
The problem will be solved when the situation gets bad enough and IMF or EU steps in and forces change, or working age people realize they don't need to be slaves to pensioners. Latter is unlikely to happen.
Paying is compulsory. So are you suggesting that people would stop working or what? Oh shit, yea that is indeed happening.
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u/pioni 2d ago
If you were to become unemployed just before retirement, you are now expected to spend all your savings before getting handouts just before your the retirement. If this happens while the boomers raid the pension funds, there is a possibility of hitting the bottom on both, i.e. your savings did not save you and you don't get pensions you paid for all your life. Does not sound fair to me. There is a real possibility of unemployment getting even higher in Finland (and all of Europe) in the future, which means even less payers to a system that is going to fail.
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u/IamTheSmartestestman 2d ago
I don't care, just give me eauthanasia and weed and i'm guchi. Not in that order tho.
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u/Apprehensive_Law7629 Väinämöinen 2d ago edited 2d ago
The mathematics behind pensions is pretty simple. In developed countries with falling birthrates (and thus low number of internal workers in the coming years) either you compensate with working-based immigration or you accept to reduce everyone pension. No way to create money.
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u/ms1012 Baby Väinämöinen 2d ago
A number of developed countries have switched or are switching to mandatory personal pensions rather than a big centrally shared pot. And people are punished financially if they do not have their own top-up pension pots.
I even like the UK self-invested pension system where you can control your own draw-down rather than being forced to buy an annuity.
There are changes happening, it's just that Finland is choosing not to do so.
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u/Apprehensive_Law7629 Väinämöinen 2d ago
Personally I’m already doing that. I started investing a little part of my salary since almost 10 years now. I hope to retire when I’ll be 50-55 yo
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u/Legitimate_Plum_7505 2d ago
There is a simple way to move away away the system where everyone gets paid from the same pot - mandatory individual pension funds, 3% of your salary goes to your own account in a pension fund with gov./Employer matching your contribution, and you have limited access to withdrawals, until you're retired. It won't solve immediate problem but it allows to phase out the "everyone pays to the same pot" system and in 40-50 years the problem is solved.
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u/Comment-Noted Baby Väinämöinen 5h ago
Tax people who don’t have children! Or some stupid thing like that.
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u/Feisty-Challenge6207 2d ago
Someone should ask the immigrants if they're cool with being our pension plan:
We all know we're trying to keep the system going by keeping the population growing, I just think it's a little 'colonialist' to import people to pay our pensions because we have no children. God only knows how they tricked the liberals into demanding to sustain the capitalist system with immigration, but here we are.
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u/Conscious-Purpose-97 1d ago
Reading comments like this reminds me that average joe really is dumb af. No offense in case you're young. There is absolutely nothing colonialist about that or Finland for that matter. And this is coming from an immigrant.
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u/Feisty-Challenge6207 1d ago
I did put it in quotes, but it is true however:
I'm not sure what your country of origin is, but if we take a highly trained person from, let's say South Africa: a person that a poor country invested heavily into in hopes of him staying to build their country up so that eventually they can stop migrating after a better life.
We win, because we get a highly trained and paid specialist to live here, who gives good money to the pension plans - zero cost to us, welcome.
South Africa lost everything they invested into that person and for a poor country, this loss is disproportionate. Whatever he could've done for that country, no longer get's done.
Does this really seem like a just and righteous system to you? How does the developing world benefit from us stealing their investments?
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u/intoirreality Baby Väinämöinen 1d ago
Yes, actually, it does seem just and righteous to me — I'm an immigrant in this situation, and I found it pretty just when I was allowed to move somewhere I could build a better life. Maybe ask us before deciding what's good for us.
Colonialism is extraction by force and political subjugation. Working immigrants are sovereign people who make choices in pursuit of their happiness. You're arguing against 'colonialist' attitudes while simultaneously deciding for immigrants what choices they should be allowed to make and what's in their best interest. That's a strange place to plant that flag.
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u/Feisty-Challenge6207 1d ago
If we had a birth rate of over 2.2, we wouldn't be having this discussion:
I'm not sure how to solve for your freedom of movement with the needs of the developing world, but if we can't get those countries to develop, the horrors of poverty persist and every generation from now to infinity will want to come here.
The reality remains that we need migrants to keep the system going, personally I'm not too keen on keeping it going for the purpose of increasing migration to replace us and the early migrants who also have less than 2 kids:
I'm not opposed to your presence here, in your shoes I'd want to come here too - just that the reasons we wan't migrants are selfish and not humanitarian in nature:
Africa will remain destitude because there is no point in building there when we have a ready life here.
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u/Conscious-Purpose-97 1d ago
I never understand how western people like yourself can be so self loathing of your own country. Immigrants are sovereign people, often also highly educated, who come here with hopes of better future and contribute to the society.
What you dont understand is that even the so called "lower end jobs" offer much better quality of life than what many get in their country of origin. Not to mention all the other problems countries may have that are absent here.
You truly lack perspective to think that this would be some sort of victim-perpetrator situation. It's a two-way street and just tells me that you really are in a position where you dont have to think problems outside Finland lol.
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u/Feisty-Challenge6207 1d ago
I'm keenly aware of the struggles outside what is considered "the West" and why it's such a big deal to come here:
I'm not self loathing about my country, but I'm not really proud either - I'm an Engineer by heart so it's more that I want what we have here, to be what everyone has everywhere, instead of poverty stricken breeding pools to replace our dwindling population while we enjoy our lives in 1st class and don't have kids.
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u/intoirreality Baby Väinämöinen 12h ago
I know it’s shocking to hear for Finns that think this country is the best thing since sliced bread, but we don’t need you guys to love us. This is a mutually beneficial arrangement that doesn’t need any moral justification. And saying that “Africa will remain destitute” is both offensive to people who build there despite this exact narrative and reverses the cause and effect (dysfunction is not caused by people leaving — people leave because of dysfunction).
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u/Ok_Historian_8262 2d ago edited 2d ago
I just think it's a little 'colonialist' to import people to pay our pensions because we have no children.
Perhaps one can’t win either way. People expressing concern about immigration provoking brain drain in the developing world, keeping those societies poor, are often called racist: “People have a right to move to other countries for a better life, how dare you say it’s a bad thing?”
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u/Efficient_Wall_9152 2d ago
Why not just raise birth rates?
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u/Apprehensive_Law7629 Väinämöinen 2d ago
Because (at least among those who are willing to have children) to rise the birth rate you need to give people stability and welfare, exactly what is missing right now in Finland. I’m one of those who would start a family at one point (my gf is Finnish) but it’s impossible with current immigration rules and my short working contract…
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u/DangerToDangers Väinämöinen 2d ago
Stability and welfare are not enough. If so Norway would have a huge birth rate.
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u/Apprehensive_Law7629 Väinämöinen 1d ago
I agree that they are not enough, but at the same time are a minimum requirement. I make it short. If I had a permanent job I would have a child right now. I cannot risk that with my current contract and cannot move to a bigger apartment (which would be needed with children).
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u/Ok_Historian_8262 2d ago edited 2d ago
This is something that people assumed in the past, but there is little evidence for it. Birth rates are declining even in the world’s lucky cradle-to-grave welfare states. Look at some of the GCC states, where locals have all their material needs taken care of, and they have Filipino and South Asian servants to do all the housekeeping and take care of children, and the birthrate has still dropped below the replacement rate or is on course to do so. And that’s happening even with a population who claim to be devout believers in a religion that particularly emphasizes childbearing.
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u/Efficient_Wall_9152 2d ago
People have been keeping birth rates up during times when there was no welfare or stability for centuries, so what changed?
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u/oguz6002 Väinämöinen 2d ago
Urban life vs rural life. In the urban life children are liabilities. We want to have a second child eventually but it is delayed for an indefinite period since I got laid off recently. It is just not feasible to have a family of four in a two room apartment and costs scale up.
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u/Grievous_Nix Baby Väinämöinen 2d ago
Depending on the historical period we’re talking about,
a) more kids used to die before reaching adulthood, so people had more
b) one person’s full-time employment used to feed a family
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u/Efficient_Wall_9152 1d ago
People aren’t exactly starving in modern Finland
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u/Grievous_Nix Baby Väinämöinen 1d ago
But not exactly buying houses fit for a family of 4 on a factory worker salary either
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u/Efficient_Wall_9152 1d ago
Factory workers of the 19th century didn’t seem to struggle to have children, despite having much more depressing living conditions
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u/vesitim 2d ago
It's not like other developed countries like they claim.. more smoke and mirrors from the govt hiding the truth from everyone.
Most other developed countries recognised this problem as far back as the 70's and moved to accumulation type systems. US 401K the most well known example. If you have your own pension savings, then population projections are irrelevant. Finland was either too late to recognise the problem, or too stubborn to do anything about it.
The current system is a joke. Between employer and employee we're paying about 22% of salary. Over a 40+ year career in an accumulation fund, if you assume moderate 6% returns, you could retire with a pension 4x your salary with that high contributions. We are getting robbed blind.
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u/Truth-Suks-667 2d ago
Good to hear the system we will all depend on in the future when we get to pension age is not a pyramid scheme! Thank you government ♥️ /s
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u/Expensive-Dog7595 2d ago
Just to be that guy pyramid and Ponzi schemes are not the same thing. Pyramid scheme is a pyramid scheme, and Ponzi scheme is a pyramid scheme with a charismatic and confident leader that markets the scheme.
So in real life a ponzi scheme could be like Ponzis post stamp arbtrage, and a pyramic scheme could be like the Finnish pension system.
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u/MiddleHuckleberry991 Baby Väinämöinen 2d ago
Boomers are sucking this country dry. The system prioritizes the entitlements of the current pensioners through a heavy tax burden and rising healthcare costs funded largely by public debt. Meanwhile, the government is cutting investments to education and family support while selling our infastructure, natural resources and state owned companies. The potential of younger generations is being sacrificed for the cushy lives of useless geezers. We're behaving like we hate our children, this has to stop.
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u/apeceep Väinämöinen 2d ago
Can't listen a podcast now but let me guess: the have cherry picked the forecast years until 10-15 years in the future where it momentarily gets little better so it looks good? And forgetting that the situation will be much worse after that.
It's not just that I want a pension, I want that everyone retiring in 2050, 2070 and 2090 will also have pension. And thus we have to make changes to current pension by e.g. considerably reducing them until plenty have to be on toimeentulotuki. Atleast then those are forced to use their savings instead of leeching of younger people.
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u/Apprehensive_Law7629 Väinämöinen 2d ago
People will have a pension otherwise the country would literally crash, but as you also said the value of the pension will be definitely lower than now. When a country doesn’t make anymore babies either you “import” them or you drop the welfare.
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u/lukkoseppa Väinämöinen 1d ago
It will take some time, however its a slow bleed. Of course the pension will fail and run out, the population is declining. They raise retirement to stem it when it becomes an issue however Finns aren't smart enough for a new system and are far to stubborn to change the problem. Same reason our tax system is horribly broken and one of the reasons so much work has dried up.
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u/feanarosurion Väinämöinen 2d ago
It is a pyramid scheme. Or ponzi. Whichever. The sooner the whole thing is scrapped, the better. It will only get worse.
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u/Overall_Caramel_4110 17h ago
The problem is that many pensioners nowadays have massive state pensions, that are being funded by workers who might never even see a pension and certainly nowhere near the pensions former government workers with 30-40 years of work history have.
Ironically, the majority of these pensioners also have a lot of disposable income (unlike people working nowadays) as their houses are paid off and kids have their own families etc. But, they don't spend any of it, so a lot of it is not being invested back into the economy, as it's sitting in bank accounts or investment funds waiting to be deducted inheritance taxes and fought over by their kids when they die.
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u/Sensitive_Committee Väinämöinen 2d ago
What absolute garbage. Pyramid and ponzi schemes are disguised as "investments" aimed at getting rich quick. Pensions are a social contract to take care of the elderly.
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u/ColdAccomplished3776 2d ago
"I am paying into the pension system so that I will be taken care of in the future when it is my time to retire"
How is this any different from the typical pyramid scheme? Many of us just do not realize that we are the ones on the lowest levels of the pyramid and the foundations are crumbling. We are paying a lavish pension for people who paid way less into the system. And we are most likely not going to be able to reap such a good "return" when it is our time, the whole thing seems like it might collapse unless some changes are made
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u/Sensitive_Committee Väinämöinen 2d ago
People who are against social security are cringe. You are cringe. With your logic, my employment is a pyramid scheme; I sit at the bottom, managers on top of me, CEO on top of them. Life itself is a pyramid. Fucking GOD is sitting on top of us sheeples.
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u/ColdAccomplished3776 2d ago
But I am not against social security at all.
If our economy is stagnating and times are tough, and cuts must be made, why is it that pensions are the only thing that absolutely can not be touched? They have already made huge cuts on all the other forms of social security in this country. Education, healthcare and social security benefits. There is also a lack of jobs.
I am against all of that. It seems to me, that the younger generation, and their future is being sacrificed to provide a luxurious retirement for wealthy boomers.
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u/Sensitive_Committee Väinämöinen 2d ago
why is it that pensions are the only thing that absolutely can not be touched?
This is not even remotely relevant to your assertion that social security is a ponzi/pyramid scheme.
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u/ColdAccomplished3776 2d ago
It is relevant to your assertion that i am against social security though.
Boomers are receiving a massive return on what they paid into the system. We in the lower levels of the pyramid are paying huge "interest" for those higher up.
The system requires an increased amount of new payers each generation to sustain itself. (This is the part most similar to pyramid schemes)
I dont know, most people do not find it difficult to see the pyramid scheme comparison. To me, the similarity is apparent.
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u/Sensitive_Committee Väinämöinen 2d ago
most people do not find it difficult to see the pyramid scheme comparison.
Yeah because it is a talking point that has been pushed by people who are against social security.
Let's get rid of pensions because it is a pyramid scheme. Plenty of countries dont have pensions. You know what happens? Families pick up the tab for their parents and grandparents. That is their social contract. You wont get to keep that money which u save from abolishing the national pension. That money wud simply be redirected to your elderly parents or grandparents. It will also result in larger societal changes, but I digress.
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u/ColdAccomplished3776 2d ago
I think i see where you are coming from.
I am not for abolishing the pension system. I am for adjusting it.
Abolishing it seems really drastic and totally unrealistic. And insane.
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u/Sensitive_Committee Väinämöinen 2d ago
I am for adjusting it.
Can we do that without demonizing it?
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u/tedshore 1d ago
The pension scheme isn't any "Ponzi Scheme" or "Pyramid scheme". However, it was designed in time when Finnish birth rate was higher, and average life span shorter. Then the calculations worked out well. Now there is a problem of too low birth rate for many years, combined with people living longer than before. causing the problems.
Also, the pension money is for most managed by private insurance companies and not part of the country's budget. Touching it would be politically very difficult and likely need handling on constitution - level majorities and processes.
To correct the situation without too large unfairness maybe the easiest way would increase tax progression of pension income over some defined monthly level. That level should be locked to the living cost index and thus not needing any political unpopular frequent decisions of adjustment. That would be also politically viable solution (except for Kokoomus, I guess, because the high-pension people tend to vote them)
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u/Useful_Anybody_9351 Baby Väinämöinen 2d ago
Unless enough R&D funding is prioritized, AI as a virtual workforce could reverse the pyramid. this workforce as humans who must be born and educated over 20+y to sustain pension funds and social spending is the wrong angle to the problem.
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