The Pending Pension Crisis; Are You Ready?

Peter Zloty - Jun 19, 2017

According to the article “Global Pension Timebomb: Funding Gap Set to Dwarf World GDP” recently published in the World Economic Forum, the world’s six largest pension systems (U.S, UK, Japan, Netherlands, Canada, and Australia) are expected to have a

According to the article “Global Pension Timebomb: Funding
Gap Set to Dwarf World GDP” recently published in the World
Economic Forum, the world’s six largest pension systems (U.S,
UK, Japan, Netherlands, Canada, and Australia) are expected to
have a joint shortfall of $224 trillion by 2050, setting the world
up for the biggest pension crises in history. Subsequently, the
anticipated increase in longevity and ageing populations has been
coined the “financial equivalent of climate change”. We have to
face this problem head on, and acknowledge that this is an issue
that will affect our children and future generations.

 

 


There are five high priority actions that governments and policy
makers should take to adapt pension systems to address the
challenges:


1) Review normal retirement age to increase in line with life
expectancies


2) Support financial literacy efforts starting in schools and targeting
vulnerable groups


3) Provide clear communication on the objective of each pillar of
national pension systems and the benefits that will be provided


4) Aggregate and standardize pension data to give citizens a full
picture of their financial position


5) Make saving easy for everyone 


Governments, as well as policy makers, have an important role
to play in reforming pension systems in societies where living to
as old as 100 is becoming increasingly more common. However,
the question is what can we do? Well, more and more we see a
need for retirement planning as facts like these come to light, for
efficient and effective approaches to make us more prepared as
future retirees. Planning ahead to save and knowing exactly how
much money you will have in retirement, instead of depending on
a government pension which may or may not materialize will give
you peace of mind, as well as prepare you for what may lie ahead.

 

As always, I am available for any questions or comments you

may have.