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CHRONIC. It is easy to switch from a capitalization system to a pay-as-you-go system, as Pétain did. The reverse is much harder.

Par Ferghan Azihari

The pay-as-you-go pension system will force several generations to foot the bill.
© JOEL SAGET / AFP

Published on 03/22/2023 at 07:00

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Lhe pay-as-you-go pension, as we have seen, is one of the biggest scams in history. It does not even benefit seniors, who are accused – rightly – of having been short-sighted towards current generations, who will have a pension lower than the amounts they will contribute. The economist Nicolas Marques recalled in these columns that the internal rate of return of the distribution was 2.5% for the generation born in 1950.

Although correct, this rate – which has been falling ever since – remains lower than the return on capital that Thomas Piketty has estimated between 3 and 6% per year for three centuries, taking into account inflation and management fees. The loss of chance that distribution inflicts on our country is all the greater than the income it generates…