Pay-as-you-go Pensions — Liberalisme.org

01 The pyramid that flips over

In 1950, France had
4,0 workers per retiree.

Youth (< 20 yrs)

—

Workers (20-64 yrs)

—

Retirees (65 and over)

—

1950

02 The promise that keeps growing

Born in 1900 — retirement lasts
2 years.

Sources: INSEE long series · effective ages DARES/COR · POPLEG 2024 projections. Retirement duration = average age at death of retirees − effective retirement age.

03 The generational trap

Four generations, four balances
— the one who pays is never the one who receives.

● The invisible rule

The later you are born,
the heavier the bill.

Without accumulated capital, the system redistributes in reverse: from contributors to those leaving. When the pyramid flips, it is the contributors who grow poorer — they inherit a contract they never voted for.

04 The patience curve

Another system is possible
— funded pensions.

Two settings, a single exit at 67: how much you set aside each month, and the age at which you start. The return used — 7% real net per year — is neither bold nor optimistic: it is the historical average of a diversified global portfolio over 125 years. What surprises is the shape of the result. Not a straight line — a curve that rears up.

Age at which you start saving

25 yrs

Monthly savings

200 €/mo

Capital at 67 0 €

● Constant contribution, retirement at 67, 7%/yr real net return (historical average of a diversified 60/40 global portfolio, 1900-2024). The curve shows the effect of compound interest on capital that starts early.

05 Head to head

Your 0 € contributed
— two opposite fates.

You set above: 200 € per month starting at 25 ans. That is 0 € over the career. Depending on the architecture that receives them, the same euros produce two radically different outcomes.

Pay-as-you-go

An intergenerational
transfer

Your contributions fund today's pensions. In return, you are promised the same, later.

Your 0 € become 0 € of capital in your name at 67

Promised monthly pension 0 € paid for ~20 years · i.e. the total contributed, with no return

Who holds the money: The State
Source of return: Demography × growth
Inheritable: No
Changeable by vote: Yes, every term
Main risk: Ageing, politics

Funded

Capital that
belongs to you

Your contributions are invested in markets and grow. At retirement, you draw on your own capital.

Your 0 € become 0 € of capital in your name at 67

Monthly income from capital 0 € for 20 years · residual capital remains inheritable

Who holds the money: You, via a fund
Source of return: Markets (~7%/yr net)
Inheritable: Yes
Changeable by vote: No — contractual rights
Main risk: Market volatility

Ordinal qualitative assessments — not an exact measure. Sources: OECD Pension Markets 2024 · COR 2023 · Mercer CFA Index 2023.

06 The three pension Europes

Three approaches
— with very unequal results.

European countries fall into three families by the place they give to capital in their pensions. France is alone in the first. Hover a country to see its key figures.

Sources: OECD Pension Markets in Focus 2024 · Mercer CFA Global Pension Index 2023 · Eurostat · COR. Funds / GDP = private pension fund assets relative to GDP.

07 Received ideas

Five objections
— put to the test of the facts.

Funded pensions trigger reflex objections. Some are legitimate — they deserve a serious answer, not dismissal. Flip each card to see what the data says.

● Conclusion

« Promising a pension is easy.
Finding the workers who will pay for it —
that is another story. »

Pay-as-you-go is not bad in itself. It worked remarkably for thirty years, on a demographic pyramid that no longer exists. Refusing to see it is not solidarity — it is passing the bill to the next generations.

Sweden did it in 1998. The Netherlands had done it before. Switzerland always has.
The question is not whether it is possible — it is how many more years we will wait.

Read the public debt feature → All features

Sources & methodology

COR — 2023 Annual Report, financial projections of the pension system.
INSEE — Demographic projections 2021-2070, central scenario.
OECD — Pension Markets in Focus 2024, pension funds by country.
Mercer CFA Institute — Global Pension Index 2023.
DREES — Retirees and pensions, 2024 edition.

Pensions by pay-as-you-go

In 1950, France had 4,0 workers per retiree.

Born in 1900 — retirement lasts 2 years.

Four generations, four balances— the one who pays is never the one who receives.

The later you are born,the heavier the bill.

Another system is possible— funded pensions.

Your 0 € contributed — two opposite fates.

Three approaches — with very unequal results.

Five objections— put to the test of the facts.

Pensions
by pay-as-you-go