In other words, the total expense on account of old age pensions in Germany for that year amounted approximately to $57,000,000, of which the state paid something over $12,000,000—an interesting contrast to the enormous expenditure of the United States upon war pensions in the same year, the difference arising in the main from the fact that one expenditure was made under a carefully thought-out and carefully planned system, the other under an arrangement largely the result of accident modified by political considerations.
The relative wisdom of these different forms of pension systems has been the subject of sharp discussion during the past fifteen years. Out of this discussion one or two general principles appear to have been settled. The investigators of pension systems agree that the pension should be paid under definite and specific conditions, not as a matter of chance or of preference. A second conclusion to which practically all publicists have come is that the system under which a part of the pension is paid by the employing agency, but in which entrance to the pension system is a voluntary act, is a failure. Not that such a pension system will not accomplish good for many of those who enter it, but the very person it is instituted to relieve will not be affected by it. Such a system will, as a rule, fail either to relieve or to educate those lacking thrift, the very class most likely to need aid in old age. The experience of the past seems to show that one might as well expect all government civil servants to take out life insurance policies as to enter into such a plan for the relief of old age.
The discusion of pension systems at the present date, therefore, has practically settled down to the consideration of two systems: either one in which the contribution is compulsory upon all the prospective pensioners, or one in which the entire cost is borne by the regulating authority. It seems likely that in the future the development of pension systems by corporations or by governments will be along one of these lines, and this notwithstanding the fact that serious objections have been made and continue to be made to both plans.
If contributions are exacted from all, the contributors acquire rights which in some cases prove embarrassing to the administrators of the fund, if that administration be a government or a corporation. For example, great difficulty was found in dismissing certain dishonest police officers in New York City, because by their contributions to the pension fund of the force they claimed a vested right in their office. This, of course, is an extreme case.
It has also been shown by experience that in a contributory pension system the emploj'ees will sooner or later make the following demands, which it is difficult for the employer to resist, and yet which greatly increase the cost of the pension system: (1) that if the employee resigns or is discharged his contributions shall be returned to him, with interest;