I figured the one upside of retirement was it was a baseline for the poor. If it screws them over too I think it should just be eliminated all together and return the tax to the worker to save/invest on their own.
American Social Security had an age of 65, but at the time of its passing life expectancy for American men was 58.
As you can already read sidethread, a life expectancy of 70 means huge majorities of people living well past 70. Every baby who dies at the age of 8 months means half a dozen people die in their 80s. (Or, you know, several dozen people die in their 70s.)
Even if lifespans weren't skewed low, which they are, 50% of all people would live beyond the life expectancy at birth.
That was life expectancy at birth. It makes more sense when considering retirement system design to consider the life expectancy of people who are at least old enough to be in the workforce.
Of the people who were 21 when Social Security passed around 65% of them survived to at least 65.
Of the people who were born around the time Social Security passed, over 70% of those that made it to 21 made it to 65.
I think still today that is a deciding factor, as some economies have high unemployment and there retirement can be cheaper and better than caring for unemployed people at all ages. And other economies have high employment and would even benefit economically from a larger workforce.
Unfortunately it doesn't work for everyone, though, and a traditional pension is still needed as a backup.
The system that GP described forces people to put their money into superannuation funds (not government) that invest on their behalf, which I'd say is pretty competent government policy. For the most part it works well, but it does distort the market (e.g., super funds buy housing stock, old people have more money available to them), and not everyone can contribute enough before retirement age. The counterfactual would be a whole lot of people that have spent all their savings by retirement age.
Maybe you were referring to another country though.
There is also the option of running a self-managed fund, where you invest the money yourself.
That said, it has created an incredibly politically powerful industry managing $3.3 trillion, which comes with its own issues.
For further clarification, it's the employer who has to pay the super contribution, not the worker.
And if anyone is about to claim "same thing, if the employer didn't have to pay that, they would pay it out as additional wages", my only response is a heartfelt "lol".
I can't see how it is not the same thing. The employer looks at the total cost of employment and works out if it's worth hiring someone. If that cost is 10% higher because of super, that means there is 10% less to go to (direct) wages.
Now granted, that will differ at different points in the labour market. For minimum wage jobs, I agree that employers wouldn't suddenly start paying 10% above award if super was scrapped.