While in America most people think of “welfare” as means-tested programs such as Aid to Families with Dependent Children, in reality in the United States and other affluent democracies the heart of the welfare state is social insurance programs, such as health insurance, old-age or retirement pensions, and unemployment insurance. They are insurance programs in the sense that they protect against common risks of a loss of income if and/or when certain events come to pass ; they are “social” because (...) unlike market insurance they are not run on a sound actuarial basis, the premiums are not voluntarily incurred but compulsory, and there is very limited choice or flexibility concerning the type of policy one can purchase. Why have social insurance rather than market insurance? In this essay, I take up this question with regard to old-age or retirement pensions, which at present absorb around 9 percent of the gross domestic product and 25 percent of government spending of the affluent industrial countries comprising the Organization for Economic Cooperation and Development. My aim is to show that old-age or retirement social insurance is worse in virtually every relevant normative respect than its alternative, some form of market or private pensions. By relevant normative respect, I mean those values or principles which are used by contemporary political philosophers in their discussions and justifications of welfare-state policies, and which are applicable to assessments of different systems of old-age or retirement pensions. (shrink)