Conclusion

Abstract

Abstract The book concludes by posing and answering the following question: why should those who are young, able-bodied, and productive agree to pay for the pensions of those who are elderly, infirm, and out of work? Those who have recently reached the age of majority do not now know how long they will live in retirement or how well any investments they try to save up during the next decades for their retirement would fare. From the perspective of the beginning of their working lives, it is therefore rational for each to enter into an agreement with others, who also do not yet know their fates, that, if one turns out to be among the unfortunate whose private pension pots would not have yielded enough for one’s retirement, one will receive much more in retirement, whereas those whose pension pots would have overflowed their retirements will receive somewhat less. But this arrangement will work only if each agrees to bind oneself in advance so that, if one turns out to be among the fortunate, one is not allowed to defect from the collective pension scheme and go it alone. It is rational for each to agree to share one another’s fates by pooling risks across both space and time, on fair terms of social cooperation for mutual advantage.