It depends on the system. In Holland they just abandoned this for a US-style "every man for himself" 401(k) thing. Luckily there are still parties fighting the implementation.
I don't think ponzi scheme is justified, it is too negative, it just makes no sense to actually accumulate all that wealth for so long.
It allows you to do that. In most cases there are various life index funds that operate the way a traditional pension scheme would and is likely the default option in any employer plan.
You can additionally add your own money outside of your paycheck and you can use the money inside of the fund to make your own investments. You are also allowed to take personal loans against your own 401k. Which is a generally overlooked benefit of the system. You pay interest on the loan but it just goes back into your 401k itself. You pay interest to yourself.
The great thing with a 401k is it's not industry dependent. If your employer or industry goes out of business you still have a lot of options to move your retirement to a new employer or use some of the funds to bridge yourself to a new line of work.
I used to hate it but now that I've used it I quite like it.
I prefer the old system because it's simpler (the last thing I want to do is manage investments) and it doesn't run out like a personal pension does. You just get the monthly amount as long as you live. Because it's a group scheme. Some people are luckier than others.
Unfortunately Holland has become very neoliberal and everything collective or social is frowned upon. That's really why they changed it.
> the last thing I want to do is manage investments
You are not required to. You can set your portfolio to be 100% mutual funds. Several exist. They have names like "Fidelity Freedom Blend 2045" or the "Blackrock Lifepath 2045." Your provider almost certainly has a default in this category they will pick for you if you signal no other intent.
> Because it's a group scheme
A 401k can be group or individual. It's your money in a special status that's allowed to be used for certain purposes before taxes. The proceeds are tax free under certain circumstances. It's entirely up to you what you do with that money including just stashing it into a fund and forgetting about it.
> and everything collective or social is frowned upon
There are advantages and disadvantages. Populations and circumstances change over time. With the world working to phase out petroleum it should be no surprise that Holland needs to adjust.
> and it doesn't run out like a personal pension does. You just get the monthly amount as long as you live
It doesn't run out? What's this magic infinite money? It doesn't run out because when it runs out other people are working for you. It's a great system that exploits the young to benefit the old that didn't save enough. The new system removes the magic and you have what you saved.
The people that live longer benefit from the ones that don't, but it's about reassurance, it's not an investment. If they had lived longer they'd have had that reassurance too.
About the first pillar (national pension), Google tells me:
> You are insured for the state pension if you live in the Netherlands and for each year you are a resident you accrue 2% of the state pension. If you have been in the Netherlands for the full 50 years prior to your state pension age, you will receive the full 100%.
Many highly developed countries used to have a second pillar (company-sponsored pensions, either defined benefit or defined contribution), but those are slowly fading away after adopting more neo-liberal economic policies.
Personally, I am OK to privitise/personalise some of your retirement pension risk, but not all of it. Large parts should still be guaranteed by the state. The real problem with privitisation/personalisation of retirement pension risk, most people are much worse than professional investors. Also, a huge portion of your retirement savings are earned in the last 10 years when your invested capital is almost peak. If there is an economic crisis during that decade, you are screwed. Can you imagine being 5-10 years away from retiring in 2007... then 2008 Global Financial Crisis happened? You will definitely need to delay your retirement by 5-10 (more) years. Awful.
I don't think ponzi scheme is justified, it is too negative, it just makes no sense to actually accumulate all that wealth for so long.