A Critical Survey of Pension Provision And Pension Reform

This essay surveys global pension developments and intellectual basis for pension reform in the last 40 years. National retirement income security systems share similar goals: smoothing consumption over a lifetime, providing insurance against long life and poverty; avoiding accidental bequests; and distorting capital and labor markets. Pension systems should be efficient and anticipate business cycles and financial uncertainties. Experts agree transitioning from unfunded to funded systems creates dead-weight losses and legacy debt. Despite similar goals national pension institutions vary by a nation’s political economy—large wealthy social democracies have different systems than less developed nations. Intellectual and political debate concern whether advance–funding pensions leads to more private savings and investment, whether collective institutions are more cost-effective than private alternatives; and how to manage long term public systems when government capacity is weak and influences by private financial interests. There is no consensus that longer working lives is a one-size-fits-all solution to pension affordability, labor shortages, and elder well-being.