SEB Analyst Predicts Demise of State Pension System
Estonia's current working population shouldn't expect any support from the state pension fund in their golden years as the system is approaching its final days, according to SEB Bank economist Hardo Pajula.
“The end of the state pension system is near,” he said in an October 19 interview on Kuku Raadio.
Pajula said that state pensions, which were introduced in Europe after World War II as part of social welfare programs, were essentially pyramid schemes, and as such relied on a larger number of people coming in at the bottom level.
“The demographic situation in Europe demonstrates an aging population and a reduction in the number of taxpayers. This is where the problem starts,” he said.
He noted that the use of tiered pension systems has been helping the situation somewhat, but ultimately wouldn't be enough to keep the system going.
Pajula's comments echo those of another prominent economist, Andres Arrak, who in an interview published by Delfi on October 18 said that the state pension system would only last another 10 to 20 years.
Arrak's advice to those worried about their retirement finances was to have children and invest in things that appreciate in value such as real estate and art.
Steve Roman