The global retirement crisis: the threat to World stability and what to do about it

• Behind the Projections: quantifies the cost of leaving current policies on autopilot
• A Reform Guide: discusses the range of possible reform strategies
• World Tour: describes what individual countries have accomplished, and what still remains to be done
• The Bigger Picture: steps back and looks at the broader impact of global aging on the economy and society, its effects on savings and productivity, international capital flows, the family, politics, and the world order

The report concludes that the public pension systems in the developed world cannot survive the age wave without fundamental reform. Most countries will have to scale back pay-as-you-go benefits and develop new funded alternatives. Although some countries are well on the road to reform, in many countries the journey has barely begun.

Ironically, it is the developing countries that are undertaking the most ambitious reforms. The economies of the former Soviet Bloc are busy rebuilding pension systems that collapsed during the transition from communism. Many are introducing funded second tiers into their pay-as-you-go systems. Meanwhile, Latin America remains a laboratory for pension reform.

The authors suggests that the following lessons should be kept in mimd by country leaders:

• Pay-as-you-go is the new source of retirement insecurity. Pay-as-you-go public pensions can no longer provide the guarantee of a secure retirement they once did
• retirement policy is no longer just about retirement. Savings, investment, productivity, labor markets, immigration, and capital flows all need to be a part of the retirement policy debate
• any solution must transcend partisan ideology. A social institution that vitally affects every citizen cannot be reformed without broad-based consensus
• there is only a narrow window of opportunity. With large postwar Baby Boom generations now in midlife and relatively small generations born during the Great Depression retiring, the countries of the English-speaking world are experiencing a kind of “Demographic Indian Summer” in which the pace of aging has temporarily slowed. Within the next five to ten years, the demographics will shift—and the window of opportunity will close. Leaders need to act before it’s too late.