The one thing I'm not seeing in the comments is a discussion on the fundamentals of pension schemes.
In principle, a pension scheme will work forever, in isolation, as long as the following inequality holds true:
(A:=(working_pop * avg_income * avg_pension_tax_%)) >= (B:=(retirement_pop * avg_benefit_payout))
If investments are allowed in said scheme, the inequality can be relaxed slightly:
A + (C:=(investments * return_ratio * withdrawl_%)) >= B
with (investments:=(previous_investments + A-B)), and (return_ratio:=(1 + return_%)).
From here, 2 long-term paths can emerge:
a) C >= B : The entire scheme can run off of investment returns, reducing reliance on A. This is the ideal.
b) A + C = B (see below). Future C may be less than Current C as a result, making the chances of (b) happening again increase.
The vehicle begins to fall apart when A + C From there, the following solutions are brought out to reaffirm the inequality:
- Increase any(working_pop, avg_income, avg_pension_tax_%)
- Decrease any(retirement_pop, avg_benefit_payout)
Some of those modifications are unpalatable to some of the voting population, and thus can't be changed:
- The elderly will not be happy if avg_benefit_payout decreases
- The 'close-to-retire's & the general working pop in general will not be happy if the retirement age increases, in an attempt to reduce retirement_pop
- The working pop, depending on culture, will not be happy if avg_pension_tax_% increases
- Anti-immigrants will not be happy with immigration, in an attempt to increase working_pop
That leaves very little on the table:
- Child tax breaks & incentives in trying to increase working_pop, but this takes time
- Increase avg_income, increasing pressures on businesses in order to keep margins the same
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There is a way to always keep the scheme alive, when all else fails, but it's a last-ditch effort only reserved for emergencies.
Referring back to the relaxed inequality above (A + C >= B), we can append another inflow stream to the left side of the inequality:
A + C + (D:=(treasury_money_printing)) >= B
This will keep the scheme working, but it sacrifices the long-term value retention of the currency being used. The baseline inflation for said currency increases, giving everyone a 'soft tax' via the debasement of the currency in question.
The implications of incorporating D into the inequality would mean that the currency's ability to keep its value long term will be brought into question. Very little good will come from a weakening currency, unless the country is a net exporter.