Didn't we already mostly move to that system, and don't a lot of people already argue that it's true?

Most companies don't offer pensions anymore. Some companies don't even offer 401ks at all, and a significant portion of the ones that do don't do any employer contribution matching.

Maybe in the US, but that is illegal in Developed countries.

We’re not all in a race to the bottom.

They have pensions in the US, it is called social security. But it is not self-sustainable and not good enough for medium-and-above income earners. It is basically a way to ensure seniors don't live in abject poverty.

What they moved away from was private pensions owned by your company. Now you own your private pension through the 401k thing they keep talking about. This IS a better and more sustainable system, but at the same time this was rolled out most companies also cut company-pensions but didn't give you more compensation that you can put on your 401k.

European companies are not forced to pay into your private pension either, it is usually part of union negotiations. Check how much basic pension pays out in Sweden (the almighty socialist country), last I checked it is ~900 euro per month. My parents in law make that much per month in retirement because they never put any money towards a private pension and never held a unionized job.

European pension systems have multiple components. There is usually a minimum guaranteed pension based on residency alone, which is paid if you don't have enough income from other sources. That can be supplemented by a separate housing benefit.

The main component is usually something similar to US Social Security, except that contribution rates are higher (16% in Sweden). Benefit rate (at any given retirement age) is usually close to a linear function of total contributions, adjusted for inflation. Most people expect to get most of their retirement income from that component.

Then there are supplementary components, such as voluntary or union negotiated private pensions. Some of them are a bit weird, such as the Swedish defined contribution plan with a mandatory 2.5% contribution.

The big thing is that the public Swedish pension is based on earned tax income, so it adjusts based on the workforce contributions. Meaning your pension goes down if the country is doing badly.

Sucks for the elderly, but it prevents the catastrophe that is France and that the US is heading into.

It's legal in some EU countries as well. Companies outside collective bargaining agreements are under no obligation to provide you with any pension plan here.

> But it is not self-sustainable and not good enough for medium-and-above income earners.

It seems good enough for median earners. After taxes and health insurance, it's basically even.

Perhaps not self-sustainable you mean that unless something changes, it's not going to be able to keep paying out at current rates.

Well, I got news for you - that's what is happening for almost all government-run pension programs across the world on this model. Pay as you go does't work when you keep the same payment, and have 10x a higher ratio of recipients to payees.

This isn't unique to Social Security or the US. It's just a mathematical fact of the system.

You cannot have 99% of people contribute `x` and 1% of people receive `y`, and then switch that to 70% contribute and 30% receive, without either increasing `x` or reducing `y`.

You could have planned ahead for this long ago, and seen that the ratio was going to change and increased `x` over time accordingly or planned to reduce `y` over time accordingly. But we didn't, and mostly no one else has either.

GP was confused probably. In EU when we hear a "pension plan" we usually think "social security", since we* pay a significant part of our earnings for this, so this is something we definitely count on and, at least in theory, it should be enough for good retirement (in practice it really varies). Many countries also have mandatory private plans that companies have to pay for, but I think people* think of them as "something extra on top" instead of the main retirement source.

*Asterisk because EU is big and diverse, and I don't know every country rules.

Listen, I love a good chance to call the US undeveloped as much as the next ideologically motivated POS but the reason the US got off of pensions and onto 401ks is because of how many pension funds had serious issues with mismanagement and inability to provide payouts over the years. And this change happened during the arguable peak of the US public's support for regulatory solutions so it's not like they said "oh we can fix this we a few rules but we're not going to because reasons", they legitimately didn't think they could fix it. So far the 401ks and IRAs that replaced pensions have been decent. And as the other guy says, you can argue that Social Security is basically a public pension.

Not only are we not all in a race to the bottom, in European countries we've got full on gerontocracy (e.g. triple lock in UK or pensioners having larger income compared to median worker in France). You know, we could actually think about younger people and stop subsidising boomer luxury communism.

Yes, it is terrible.