To fight pension cuts, we need an alternative society project

Since early September, massive protests – some with hundred thousands participants – are shaking France and desestabilizing the Right-of-Center government. But it was by no means the only example: in 2025, countries such as Argentina, Panama, Belgium and Nigeria had similar demonstrations.
Over recent decades, under neo-liberal hegemony, we have witnessed a series of defensive struggles against cuts to public pension systems. While important as a form of workers’ resistance to downsizing the Welfare State, these battles raise a fundamental question: What are the inherent limits of public pensions and the redistribution of goods and services in a society?

In capitalist societies, retirement systems are funded through three primary methods:

1. Pay-as-you-go (PAYG) systems financed by employer and employee contributions.
2. Tax-funded redistribution where the state directly covers costs through
   taxation—ultimately deducted from workers’ and business owners’ incomes.
3. Individual capitalization accounts based on personal savings.
   Obviously, all countries mix these methods within their particular systems. Capitalist PAYG
   systems must also compensate for revenue losses due to unemployment and, crucially,
   precarious labour—most decisive in dependent countries such as Brazil, in which nearly half
   of the working population is precarious or self-employed. Yet regardless of the economic
   system, rising life expectancy requires that an increasing share of social reproduction (the
   total labour employed to care for the children, the elderly, the disabled and sick people) be
   consumed by retirees.
   Even in a socialist society, there would be some structural limits imposed by an aging
   population. For maximal simplification, let’s imagine a society in which:

• Labour vouchers substitute for money (eliminating monetary form)
• There’s a general 120-year lifespan, with people evenly distributed across all age strata.
  That is, the population pyramid is closer to a rectangle (equal cohorts).
  In this extreme scenario, the aged dependency ratio, that is, the proportion between elderly
  inactive and active workers, would equal the ratio between average working years and
  retirement years. For example:
• Work start: 18 | Retirement: 65 | Death: 120
• Elderly dependency ratio: 117% (55 retirement years / 47 working years)

Japan’s 2023 ratio reached 71%—its pyramid is already inverted (more elderly than children)—yet still far below this hypothetical extreme.

Brazil’s dependency ratio is rising rapidly, as shown below in this graphic found in this article by Bruno Guimarães de Melo and Eduardo Rios Neto.

PAYG systems show in an “easier” way social reproduction: Contributions represent society’s collective labor sustaining retirees. Capitalization systems obscure the role of the asset valorization (ultimately a reflex of the accumulated profitability of capital) that expresses itself in an indirect way through bonds and equities. Here, workers appropriate some of the surplus-value in capital accumulation via pension funds.  If retiree incomes are the same as active workers’ the contribution/work ratio must equal the elderly dependency ratio.  

Even under capitalism:

– The ratio between the total wage mass and pension expenditure links indirectly to dependency ratios.  

– Mass unemployment/precarious labour proportionally reduces contributions—a core structural cause of deficits.  

The most important insight we have to retain is that the pension’s funding is not a form of exploitation, instead it is a repartition of the social reproduction between the working and the retiree parts of the working class and the dominated classes in general. 

As Ian Gough emphasizes in his book The Political Economy of the Welfare State:  Non-working groups rarely pay income tax but face indirect taxation on consumption, complicating the picture. Some tax revenue returns to working-class families as social security benefits (child allowances, sick pay, short-term unemployment support) and via education/healthcare. However, the largest share funds non-working groups through elderly pensions, disability benefits, and health/personal services. A third portion remains state spending—primarily benefiting the capitalist sector.  

Thus, regardless of neoliberal welfare cuts, concrete limits necessitate either longer contribution periods or higher proportional contributions. The struggles against cuts in pensions should link with the demand for full employment and the transfer of State’s funding via taxes from benefits to the capitalist enterprises to the social wage. 

The knowledge of pluralist economics is thus an important tool to criticize the masking of neo-liberal policies under the guise of “scientific objectivity” and we, as members and supporters of the working class, can strive to supply this tool to the trade unions and the wider workers’ movement.