Defined Contribution Pensions, But Not Really
From a theoretical (and philosophical) point of view, the (defined contribution) pension in a pay-as-you-go system is an impersonal, non-coexistent, inter-generational, and mandatory quid pro quo. The referee which must assure that the quid pro quo is respected is the state (we have here a nice example of a hard core of public interest which would be desirable to be extended to others, i.e. national interests). As it is inter-generationally applied, such a “social contract” faces some accidents, some of which are objective, others not quite. For example, a current generation “i”, is paying social contributions during its active life to the generation „i-1” – I will do not complicate the discussion by taking into account that, in fact, there is an overlapping of generations both as paying social contributions and as benefiting from defined-contribution pensions (this would be useful if done for the public finance decision). In turn, the current generation “i” (which is the future “i+1” retired generation) will benefit for its pensions from the social contributions paid by generation “i+1”, and so on. This mechanism seems to provide a roughly fairness, because the pensions are calculated based on the effective social contributions paid during the active (that is, economically productive) life. Rawls, as pure contractarian, would say it should be designed and implemented in the legislative stage of making the social contract, not in the original position. Below, I ask myself whether such fairness is really effective and, if not, how we should to proceed. The discussion is inherently coupled to the debates regarding the increasing of the pensions in Romania. I will do not discuss the (judicial) fact that a normative act which was already been constitutionally enacted by the legislative authority leaves, I think, an extremely narrow room, if any, for doubts regarding its implementation, but, instead, I will deal with only some very simple economic and social questions (more exactly, of social justice). More