Pay-as-you-go pensions, funded pensions and income distribution

We look at the shares of pay-as-you-go and funded pension systems in the United States, the United Kingdom, Germany, France, Spain, Italy and Japan. The “modern” trend of Anglo-Saxon capitalism has been to obtain a high return on capital by skewing income distribution to the detriment of wage earners. In the countries where this trend of capitalism is at work, the profit share of GDP has risen structurally, payroll growth has slowed and fund ed pension systems ( provided they are heavily invested in equities) ha ve outperformed pay-as-you-go systems . The choice in favour of a pay-as-you-go pension system therefore only makes sense in the countries that have “resisted” Anglo-Saxon capitalism and where income distribution has not skewed to the detriment of wages. We find that t he choice of pension system is consistent with this everywhere, except in Germany.