The Ageing Population

We are in the middle of the biggest pyramid scheme ever. Currently it takes about two workers to support a retired person. By the time I am ready to retire it will take about 5 people to support a retired person. So the only way to support my generation is to get more workers but who is going to support their retirement? The only way for the current system to survive is to keep getting people in at the ground floor. What we need is a change of paradigm. We should not be expecting the government to fund our retirement.

There are countries where the government does not fund a retirement plan for the elderly. Instead a plan is in place for each worker to fund their own retirement. Singapore is a prime example. Each month a portion of the employees wage is set aside, a bit like Super. A contribution then comes from the employer. Together they amount to approximately 40% of the wage. A portion of this is placed in a medical fund to pay for healthcare and the funds can be drawn on for buying a house. If funds are borrowed they must be repaid. Once you retire you are paid a stipend based on the amount of funds you have.

If we are funding our own retirement then the government can fund national growth, which will improve incomes for everyone. There is also the incentive to be more productive......if you are not your retirement will be poorer. The government should not be thinking how can we afford all these pensions but how do we change the paradigm.