this post was submitted on 29 Nov 2023
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You need portable pension plans that move with you job to job and accumulate nonetheless, as we have in the Netherlands
In the US, people working up through the late nineties got pensions specific to whatever company an employee works for. Now there just aren't pensions for any workers.
But hey at least they came up with this brilliant retirement plan where you can gamble your salary on the stock market instead /s
I think it's shit that it's like this however not being tied down to a job you hate is nice.
Holy fuck that's a thing?
Holy fuck you guys don't have that?
Where I live, it is mandatory for employers to start a pension scheme for all employees. The scheme is controlled by the employer until you quit. Then it is up to you to find it a good home and make sound investing strategies. You can't access the money until your are at least 62 years old.
If you find a new job, your new employer will assume responsibility over it and make sure payments are made into it on your behalf until you quit/retire.
Mandatory monthly payments your employer have to make are minimum 2 % and up to a maximum of 7% of your salary.
It is a part of your terms and conditions when you apply for a job. The employer can't take the percentage out of your salary. They have to take it from the business itself.
I'm confused as to how that works. Different pensions can promise different benefits. How does that work when switching jobs?
I am not sure about the Netherlands but where I am you have superannuation which is completely independent from your job and you control who it's with yourself. When you change jobs you just let your new employer know where to send your contributions to.
We don't rely on super/pensions for benefits before retirement age and have universal health care too.
So the US has three retirement systems.
For virtually all US workers, there is social security. This is roughly equivalent to the national pension system of other countries. You and your employer both contribute a fixed percentage of your paycheck. Upon reaching retirement age, you then get a defined contribution.
Then there are employers based pension plans. The same basic principle applies. Put money in, get money out upon retirement. It is considered a bad deal for employers, because they have a ton of financial liability on their books. In terms of monetary compensation, it is good for employees. However it takes a ton of time to be eligible, which means they can't increase their salary by job hopping and are vulnerable to layoffs. Most employer pensions are gone outside government pensions.
Finally, there are defined contribution accounts. You contribute a certain percentage of your paycheck into a tax advantaged brokerage account. You then invest these contributions, typically in a target date retirement fund. it is also common for an employer to match contributions.
We got two (three, if you count buying homes as a form of pensions scheme).
The state gives you 18,1 % of your yearly salary to your future pension. This will be the largest part of your pension payouts.
Then you have obligatory pension schemes your employers have to set up for you. If you work in the private sector, the percentages are minimum 2 % and max 7% of your salary. If you work in the public sector, you will get 5,6 % of your salary put away for pensions. You will also get around 4 % to what is called AFP. So technically working in the public sector gives you up to 9 % of your salary.
The third one is what you do on your own. Buying homes is a big part of our economy here. If you are lucky, you can sell your home for a huge profit when you retire and move somewhere else/scale down.
So I think ultimately the biggest difference here is the US defined contributions scheme that runs through the stock market and the minimum requirements.
I don't know the answer. The US system is super flawed, but a lot of nations are having issues with their national pension systems due to demographic changes. Ultimately I'll be more confident that I'll be able to rely on my 401k brokerage than Social Security.
Likewise, the US housing system was built in a way that allowed lower income people to buy homes. However that system has now been abused to raise the price of housing to unsustainable levels. I still don't think demphasis one home ownership and rent stabilization bandied around is really a good solution though.