You are here: Home Knowledge Base Society Financing Old Age Solutions Policy-makers must make pension reform credible and sustainable, by specifying a long-term trajectory of pension contributions and withdrawals, as well as a mechanism that makes this trajectory enforceable and difficult ...
Symposium 2010

Solution for Financing Old Age

The Challenge

People are living longer, more active and more fulfilling lives. But those additional years mean additional costs as pensions are drawn for longer periods and the costs of surgery, medication, healt ...

People are living longer, more active and more fulfilling lives. But those additional years mean additional costs as pensions are drawn for longer periods and the costs of surgery, medication, healthcare and nursing care continue to soar. So the flipside of the scientific triumph over illness and disease is that many people do not have adequate financial resources to support their longer lives with the desired level of comfort.

Policy-makers must make pension reform credible and sustainable, by specifying a long-term trajectory of pension contributions and withdrawals, as well as a mechanism that makes this trajectory enforceable and difficult to change in response to political contingencies.

The financial crisis has increased the need to review the design and implementation of pension systems. In most countries, making the pension system sustainable will require substantial adjustments in terms of contributions and benefits.

While all generations will be affected, the larger part of the burden will have to be shouldered by the younger generations. Younger people can only be expected to accept this if policy-makers provide a clear and credible vision of a system that promises to remain solvent in the long term given current demographic projections.

Early advance notice of measures such as increasing the retirement age or reducing the replacement ratios of public pension systems is important. But it is also essential that policy-makers outline a sustainable plan and “tie their hands,” so that future policy-makers find it difficult to diverge from the plan except in the event of unforeseen extreme circumstances. This will enable people to adjust decisions on their savings and investments in human capital, and it will increase their acceptance of reform.

    Related Solutions

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    Symposium 2010

    Encourage employers to employ and retain elderly workers by removing financial disincentives, such as seniority remuneration schemes and higher employment protection; by applying more flexible working conditions for elderly workers; ...

    Encourage employers to employ and retain elderly workers by removing financial disincentives, such as seniority remuneration schemes and higher employment protection; by applying more flexible working ...

    Encourage employers to employ and retain elderly workers by removing financial disincentives, such as seniority remuneration schemes and higher employment protection; by applying more flexible working conditions for elderly workers; and by improving workers’ employability by encouraging job training and skill enhancement throughout their working lives.

    Polity, Academia, Business, Civil Society
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    Reduce the exposure of individuals to financial risks in funded systems by improving the governance of the pension industry, amending the design of defined contribution plans by promoting life-cycle portfolios ...

    Reduce the exposure of individuals to financial risks in funded systems by improving the governance of the pension industry, amending the design of defined contribution plans by promoting life-cycle p ...

    Reduce the exposure of individuals to financial risks in funded systems by improving the governance of the pension industry, amending the design of defined contribution plans by promoting life-cycle portfolios and greater flexibility in the timing of annuity purchases, and promoting flexible defined benefit plans.

    Polity
    Solution
    Symposium 2010

    Raise the eligibility age in statutory private and public pension systems, abolish the mandatory retirement age and maintain the momentum towards ending early retirement.

    Raise the eligibility age in statutory private and public pension systems, abolish the mandatory retirement age and maintain the momentum towards ending early retirement.

    Raise the eligibility age in statutory private and public pension systems, abolish the mandatory retirement age and maintain the momentum towards ending early retirement.

    Polity