Swiss Media Mulls Pension Benefits for Parents vs. Childless Contributors to Stave Off Collapse

As the Collapse of Western Retirement (Pyramid) Schemes Becomes Obvious, 'Creative' Solutions Are Talked About--Why Not Make Passive Voting Rights Contingent on Civil/Military Service and Motherhood?

Today, we’ll talk about retirement schemes and their impending collapse.

Even though I’m some 30 years away from my scheduled (as of today) retirement, and I won’t hold my breath about anything in this regard, the age-old adage ‘demography is destiny’ is one of the keys to understanding our Western predicament.

For an introduction to the magnitude of the problem, I encourage everyone to watch Stephen J. Shaw’s documentary ‘Birthgap’:

Watch BIRTHGAP - CHILDLESS WORLD (Part 1)

Introduction to the Problem = Too Few Children

A few days ago, I saw a photo of a recent family reunion back in Austria – mostly elderly relatives and barely a handful children. Sure, not everyone was present, but the ‘greying’ of the majority was impossible to overlook.

As ‘the boomers’ retire, more obligations on part of the various pension schemes ‘mature’, i.e., government and related agencies overseeing the dispensation of ‘retirement benefits’—which is yet another Orwellian doublespeak as these are any individual’s savings that the tax authorities deduct from one’s salary and are entrusted with for later use—must pay out more and more over time.

The money for this comes from (in US parlance) withheld ‘social security contributions’ of those who are currently working. The relationship between those employed and (vs.) the general population is key to this. I’m using official US data to illustrate this point:

Source. Note that the share of working people vs. population growth has declined in the past 20 years.

Fewer working people mean less social security contributions are withheld each month while, at the same time, the share of the non-working population that is supported by the former grows.

This situation is arguably quite bad already, and it will only get worse over time.

The main reason is that the population of working age (15-64, as it is typically defined) is shrinking as birth rates plummet. The best—as in: worst—example is South Korea, whose demographics do not bode well:

Source. Wikipedia also has an eye-popping animation, which I cannot post here.

Once the cohorts currently aged 40-60 leave the workforce, problems will become too to avoid; once the cohorts currently aged 1-20, get older, disaster will befall Korea (one of the reasons is the much higher fertility rate in neighbouring North Korea).

Note that the population distribution in most Western countries looks like the one in South Korea, even if it is not as bad. At least not yet.

The Dilemma, or: Kicking the Can Down the Road

Western governments have been struggling for decades to address these problems in a way that is akin to ‘kicking the can down the road’. This is due to one of the chief problems bedevilling Western politics: short-termism and the politicisation of everything.

In the case of the former, political careerists typically think as far as their re-election campaign, with ‘future generations’ getting shafted more often than they don’t. As regards the latter, social insurance schemes used to be as boring as they could be, but they aren’t considered that way any longer.

Moreover, many people are acutely aware of the shenanigans ‘hiding’ behind empty platitudes, such as ‘retirement reforms’ and the like. What these actually mean is: outright theft. Remember, whatever share of your salary is withheld for ‘social security’ or the like is, first and foremost, your money. This is why retirement funds are typically set-up, legally speaking, as trust funds and fulfil what is called a ‘fiduciary’ role, i.e., they manage future retiree’s money on their behalf.

Hence, if a government proposes ‘reforms’ to ‘entitlements’, note that these formulations constitute a declaration of war against the people. A retirement insurance account is as much an ‘entitlement’ as, say, car insurance ‘entitles’ you to certain repairs being paid for by the insurance company on the basis of a legally valid contract between two parties. Consequently, if a politician moves to ‘reform’ retirement ‘benefits’, he or she is calling for unilateral changes to a contract said politician was no party to. In my book, this is not only depraved and illegal—but also the announcement of a criminal act.

Both aspects summarised schematically above serve to illustrate the two ways politicians like to deal with the looming bankruptcy of all these pension systems is to lie and kick the can down the road by ‘tweaking’ and ‘adjusting’, e.g., the eligibility criteria (by raising the retirement age) or reducing payments. To this Hobson’s Choice we may now add the dilution of purchasing power as retirement benefits are typically fixed sums and not automatically inflation-adjusted. The outcome is—looming poverty for many, if not most, people who will retire in the coming decades.

None of the above is unexpected or couldn’t have been foreseen, by the way. Birth rates across the globe have been falling for decades. What demographers call ‘replacement rate’—2.11 children per woman—is so far removed from almost all countries that, while the total human population will continue to rise for a few more decades (as people get older), somewhere around ± 2050, we’ll reach the moment in time when human population will decline.

As an aside, hold that thought for a moment: peaking at somewhere between 9-11 billion people, this will be the maximum number our species will ever achieve. Ever. This will be a moment for the ages, if there ever was one.

Swiss Economists Call for Higher Benefits for Parents

As more and more countries wake up to this realisation, if not to its implications, what is called ‘natalism’ is slowly making inroads into the mainstream.

A few weeks ago, I found myself talking to friends of a friend about my age (early 40s) in a bar. While my friend has one child and I’m the proud father of two, the other two people we ended up talking to were about the same age, but they were childless. One of them revealed a profound sadness that echoed some of the statements made in Stephen Shaw’s documentary. As our conversation progressed, I was called ‘the first natalist’ my sad acquaintance ever met.

Thus we come to the core of the problem: it would seem that virtually everything in the current West lines up to hasten the collapse of our social systems as they are currently set-up: fewer children, ever later pregnancies (after 30, it’s basically a toss-up, if you’re a woman), the demands of ‘making a career’ first, etc. The list is seemingly endless—and here I am talking about the looming collapse of all retirement schemes.

Yet, some people are slowly coming to their senses. Again, the price for this goes to Switzerland, as the below piece from a few weeks ago shows, which I’ve translated (and added some emphases):

It started with the venerable Neue Zürcher Zeitung’s Albert Steck calling out the problem in stark terms on 15 July 2023: ‘economists demand pension payments relating to the number of children raised’.

While tucked away in the NZZ’s Sunday magazine (which has an even more limited circulation than its regular editions), tabloid 20 Minuten disseminated the proposal to a wider audience. Entitled, ‘The more children, the more pension payments’, the latter introduced the topic in the following way: ‘raising children is a contribution to society. But women are having fewer and fewer children. Now experts are calling for raising children to pay off in old age.’

Here is the gist of the latter piece, which appeared in 20 Minuten on 16 July (my translation and emphases):

A child-related pension, as proposed by economists according to the NZZ am Sonntag, does not seem very fair for involuntarily childless couples. One may ask: should women and men whose wish to have children remained unfulfilled also be punished with a lower pension?

One can counter this: childless couples do not have to bear the costs of having children. According to figures from the Canton of Zurich, a child costs 1000 to 1600 francs a month. Anyone who is childless—whether planned or unwanted - could invest this amount month after month. He or she could have saved for old age instead of having the AHV [the Swiss federal retirement fund] paid for by the children of others.

In fact, the wage losses that parents have to shoulder are immense: if mother or father or both parents reduce their workload and thus block career opportunities, they will have earned a lot less over their entire working life.

The last paragraph is incredibly important. Until a few years ago, there was but 12 weeks of maternity leave (four weeks before giving birth, eight weeks thereafter). Those women who can afford to stay home longer do so, and many of them—in my decade-long experience of living in Switzerland, incl. welcoming our two children—do so by terminating their employment rather than going back to work eight weeks after giving birth.

As an aside, if you can imagine my contempt for those who, while living in more ‘generous’ societies, such as Austria, Germany, France, the Nordic countries, and the like, continue to complain about these arrangements—such as up to two years of paid parental leave in Austria with the employer being obliged to accept everything, even if the mother changes her mind after agreeing to something else, e.g., part-time work instead of full-time employment—you might wish to talk to my wife about this; my contempt pales significantly by comparison. But I digress.

Wage losses are significant, according to one Veronica Weisser, an economist with UBS and one of the most renowned pension experts in Switzerland: an average family with two children is ‘a good million francs worse off’ than a comparable couple without children when they reach retirement age, taking into account benefits and supplements.

And this brings us to the core of the problem, again, as per 20 Minuten:

But it is not just about a fairer balance between those who have children and those who do not. The decreasing number of children also poses a difficult financial challenge for our pension system as every fourth woman no longer bears children.

According to the Federal Statistical Office, the average number of children per woman in Switzerland fell to 1.39 in 2022. If the birth rate remains at such a low level, this will lead to a ‘significant worsening of the financing bottlenecks in our social system’, says Weisser.

And she points out that the low number of births not only causes problems for the AHV, but also poses great challenges for the health insurance funds and nursing care when more and more senior citizens, who tend to be sicker, are confronted with a dwindling number of young people.

Of course, saying such borderline ‘blasphemous’ things out loud will be met with criticism by the very politicians who oversee the running of these societal systems (although the article is rather mum on assigning them their well-deserved share of the blame):

Philipp Matthias Bregy (45), leader of the parliamentary Centre Party [Mitte], points out: ‘I am rather sceptical about this proposal, even if it sounds tempting at first glance.’ From his point of view, all injustices in the AHV must first be eliminated ‘before new differentiations based on marital status or living conditions are introduced’, emphasises the National Councillor.

And [libertarian] FDP vice-president and National Councillor Andri Silberschmidt (29) says he finds the proposal questionable: ‘Firstly, the state should neither talk people into planning children with incentives, nor provide obstacles. And secondly, the AHV must remain a living wage for everyone.’ Thirdly, however, he is of course in favour of families being relieved of the costs. ‘But linking it to the AHV is the wrong way to go.’

Here you can observe, in a nutshell, the problem with career politicians and their empty blabber: if the problem of the retirement system is the dwindling number of future contributors, how, if one may ask, can ‘all injustices…be eliminated before new differentiations…are introduced’? Moreover, Mr. Silberschmidt’s three points are not only illogical but outright contradictory—for the same reason, by the way.

Still, the proposal by Swiss economists generated a certain response beyond the small Alpine republic, as the following piece in the Hessische Nachrichten dated 21 July 2023 indicates (again, my translation and emphases):

Basel-based economist Wolfram Kägi calls for a child-dependent pension for beneficiaries of the Swiss old-age and survivors' insurance system (AHV): ‘The AHV suffers from a design flaw: it ignores the fact that without children there will be no future pensions. Instead, it simply assumes that there will always be enough families to raise children—and thus perform a service for the general public.’

Kägi refers to the high additional financial burdens resting on parents due to AHV contributions. As it stands, the return on having children is socialised, while most of the costs of the children have to be borne privately. ‘If, on the other hand, the amount of pension payments would be linked to the number of children, it would be possible to at least partially compensate for the additional expenditure of the parents’...

Support for a child-based pension benefits comes from Germany. ‘Those who decide not to have children become free riders for the pension system: they profit from benefits to which they have hardly contributed anything,’ agrees financial scientist [sic] Bernd Raffelhüschen of the University of Freiburg in the NZZ. Of course, society should not allow poverty in old age, regardless of whether one has raised children or not. However, he believes that those who provide more for the next generation should be compensated for their expenses.

Yet, there is something else at stake here that is rarely talked about (except in the below-reproduced ill-advised sentiments): the social contract.

It is true that childless people also co-finance children, for example through free schooling, and parents benefit from tax deductions and child support payments. However, these benefits do not compensate for the financial disadvantages that arise from reduced working hours or the renunciation of a career. In addition, there is the time commitment, the value of which is difficult to measure.

Of course everyone who pays taxes is contributing in one way or another, yet this is tantamount to avoiding one’s eyes from the issue at-hand. Every contributor, whether a parent or not, is part of society, and as such there are both responsibilities as well as benefits (I refuse to speak of ‘entitlements’).

And here is the crux of the issue:

Opposition to the child-dependent pension comes from the interest group ‘Pro Single Switzerland’. Its president, Sylvia Locher, calls the idea [of child-related retirement schemes] ‘nonsense’: [line break added]

‘We childless people certainly don’t allow ourselves to be talked into believing that we make too small a contribution to society’, she told the NZZ. After all, she said, they put less of a burden on the infrastructure and the social system than a family.

She supports the contribution that society makes to education. However, schools are already reaching their limits. They could not cope with another baby boom, Locher said. She described forecasts that the AHV would run out of young people as ‘scaremongering’.

Hobson’s Choice and Yuval Harari’s ‘Useless Eaters’

And this brings us to the crux at the heart of the issue: there are many absurdities clouding this kind of reporting—state-provided education is not ‘free’, for it is paid for by the tax-payers. In exchange, schools provide ‘education’ (often also indoctrination), which is a topic that has nothing to do whatsoever with having children or not. A taxpayer doesn’t get to earmark his or her contributions (even though, now that i consider it, why not?).

Still, the core problem—declining birth rates threatening pension systems—could perhaps be addressed by advocating for a more ‘natalist’ stance. It would seem that only the West’s current bêtes noires—Hungary’s Viktor Orbán and Russia’s Vladimir Putin—with their strong pro-family policies are trying to address the impending population decline, Elon Musk and Jack Ma’s sentiments warning of these problems notwithstanding:

Hungary, as pointed out by Shaw in his documentary, provides each women with a life-long 25% tax credit on her personal income for each child she bore. Giving birth to four children signifies a life without payment of income taxes. After about a decade, this policy stance appears to have at least halted the further decline of birth rates.

Of course, implementing such policies is anathema in the West, if only for the seemingly total capture of our institutions by ‘woke’ morons who claim that ‘gender’ is ‘assigned at birth’ (it is, in fact, observed) and the ensuing plethora of statements to this effect that have no basis in biology and reality.

And these reflections brings us to WEF acolyte Yuval Harari’s quip about ‘useless eaters’:

Bottom Lines: A Banquet of Consequences

If one, as a thought experiment, combines these two positions, remaining childless quickly becomes less than a ‘choice’ and seems to morph quickly into something that is perhaps more appropriately described as anti-social behaviour.

I’m not hear to call people names, but not only do we need frank, honest, and open debates about something as fundamental as the impending collapse of most of our social institutions within our lifetime, as well as the fundamental, if not outright world-shattering, change of declining human population.

I’m not here to push for one or the other solution. I will say this, though, that these circumstances do not bode very well for the coming decades as several ‘easy’ (if useless) options will likely be considered before any meaningful conversation about resolving these predicaments will be had.

Personally—and I’ll state this not because I’m a parent but because I understand the math behind our social insurance systems (it ain’t rocket science, for sure)—I think a combination of tax credits like in Hungary, official declarations of pro-family and pro-children support will go a long way towards the possibility of restoring a semblance of balance to our societies.

Yet, this won’t be done overnight, and it will require the discarding of many a golden calf, including, in no particular order, alterations to the current life-path (education, career, children in one’s mid-30s), revisions to how we intertwine esp. post-secondary training and employment (e.g., via career opportunities more open to career changes after parenting in one’s 20s), and significant changes to both family and tax legislation.

In terms of societal responsibilities, I doubt we will be able to avoid hard questions about women’s advocacy (misleadingly labelled ‘feminism’), treating members of the family units (father and mother) individually for tax purposes, and, as far as I can see, even questions about political participation should be tabled.

Epilogue: A New Socio-Political Contract

As regards the latter, democratic theory differentiates between ‘active’ and ‘passive’ voting rights; while the former signifies the right to case one’s ballot, the latter holds one can be elected. In practice, we do not longer differentiate between these two.

Yet, I think there is a strong case to be made that ‘passive’ voting rights should be awarded ‘only’ to those who ‘served’, either via conscription or alternative civil service if you’re a man or motherhood if you’re a woman. In that way, we could partially avoid governance by career politicians who shirk any kind of societal responsibility but claim to ‘work for the greater good’.

After all, one of the core debates surrounding the original demands for women’s voting rights revolved around the issue of ‘national service’—along more or less precisely the lines mentioned above: men are drafted into the army, and women’s contribution to society would be motherhood. Yet, the right to vote was given to all women regardless of any ‘service’ demanded.

On the one hand, this may be a reflection of a truthful interpretation of all being equal under the law—but, then again, why would the menfolk continue to be shanghaied into the army (note that conscription is, after all, exempted from the forced labour clauses of the Universal Declaration of Human Rights).

Let us move towards a more comprehensive understanding of ‘equality under the law’ by, for instance, introducing meaningful distinctions between ‘active’ and ‘passive’ voting rights. If, say, ‘societal service’ in the form of civil or military service and motherhood has been rendered by, say, age 35, one is permitted to stand for public office.