User:Ethouris/Bismarck pyramid

Bismarck Pyramid

A state-wide regulation in many of today states, concerning the retirement pension. The fist ruler in the world said to introduce it was Otto von Bismarck.

It relies on a mechanism of paying the monthly retirement pension to the people, who have retired, while the money for this pension come from the people, who are currently working. These working people are being promised to get their retirement pension when they retire, in the height more-less dependent on how much they were earning and how long time they were working.

This contrasts to getting money at the time of retirement from a Retirement Saving Program, which relies on that the working people save some money for getting them back later, when they retire.

The Bismarck Pyramid is a regulation imposed by the state, as it is not possible to wipe it out without paying back lots of money. In the states, in which the Bismarck Pyramid is a rule, it is obligatory for everybody to participate in this "program", despite various possibilities for retirement plans in some of them.

Not every country today has the imposed Bismarck Pyramid. Notable counties that do not have it are Japan and South Korea.

Bismarck Pyramid usually suffers from problems regarding too many factors influencing money fluctuations, which makes that it is hard to control the money in the whole system. It also often makes the connection between the "saved" money (paid during working) and the retirement pension money much looser than in case of Retirement Saving Program. It is being said also that this system requires increasing number of working people from generation to generation.

The moral controversy for the Bismarck Pyramid is that it partially undergoes the Pyramid scheme, in which the pension is paid not from the money coming from a saving program (which normally should invest the money and get a positive return on investment), but directly from the money, which would otherwise be collected for a saving program. It is being said that in every country that has a Bismarck Pyramid rule it always has happened through some kind-of "state robbery", that is, the state needed money for some very important event, so it has simply stolen the money from the savings, guaranteeing simultaneously unchanged return on investment (but not to return the money it has stolen).

External links

• Maybe example.com, but don't look at it.