Under 40s Can Forget About State Pension, Says Economist (6)

Published: 05.04.2012 14:54

Photo: Postimees/Scanpix

See Also

Prominent economist Andrus Arrak has once again issued a gloomy prognosis for the state pension system, saying that those under 40 have no hope of ever receiving a payout.

According to Arrak, the system is unsustainable because there are currently around 300,000 pension recipients in the country and only 630,000 people paying in. The ratio, he said, is only getting worse.

"There is still some hope for private pension funds, although right now they're not even able to keep up with inflation," Arrak told Delfi.

Arrak said that given the current situation, the only choice would be to raise the retirement age. But that would mean that the average Estonian, especially men, would never receive a pension because the life expectancy and the retirement age would be about the same, he said.


Steve Roman

Comments

For adding comments,enter the ERR website with your user name and password , or use the form below to comment without logging in.


Guidelines for commenting can be found here.

Comments (6)

  • pterosaur

    08.04.2012 11:01

    That's joke. I guess that also over 40s can forget about pensions and healthy aging..

  • avatar

    auslane

    09.04.2012 09:09

    It's not just about the ratio of people; it's also important what the wage levels are (as these then are related to pension contributions). Wage levels, in general, are terrible in Estonia, and for some people - like my partner and myself - who have an option to live and work elsewhere it becomes (if I can use this American term) a 'no-brainer'. I suspect many employers could afford to pay higher salaries, but don't; an anecdotal example is one associated who works 12-hour shifts in hospitality receipting 2500EUR in income yesterday, and was paid less than 3EUR an hour. All signs are that her employer is very profitable, yet - despite promises from management - workers there are yet to receive the bonus actually noted in their contracts.

  • avatar

    knut_albers

    09.04.2012 09:21

    If that's the case (and I doubt that), then the under 40s should not pay in to the pension system and may switch to a fully unfded system at their choice. Else this may be considered stealing.

  • avatar

    knut_albers

    09.04.2012 10:03

    Funded, I meant.

  • Foreigner

    09.04.2012 15:05

    Agree with Knut - what's the point of taking my money now if I know I will not get a pension in the end?

  • avatar

    knut_albers

    09.04.2012 16:06

    It is a mandated "Ponzi" scheme.