Global Pension Crisis: How Can We Solve It?
Every midsummer marks the occasion when the old and the new undergo transformation. Fresh college graduates embark upon their entry into society, bidding farewell to immaturity and campus romance, and embarking upon the pursuit of their life aspirations with unwavering determination. Naturally, in this era, securing employment becomes an indispensable prerequisite for the realization of one’s dreams. In contrast to the influx of youth, at the other end of the professional realm reside the elderly individuals who have reached the age of retirement.
This substitution of the old with the new is a phenomenon ubiquitous across the globe. In the realm of public information, excessive attention is bestowed upon the younger generation, while scant regard is paid to the elderly. Every individual inevitably ages, and the virtue of “I am old, and so are others” must not be forsaken. From an economic standpoint, it is imperative to address the pension concerns faced by the elderly population worldwide.
In recent years, numerous countries have witnessed fierce domestic political competition surrounding the issue of eldercare.
In Germany, certain business proprietors lament the potential collapse of the country’s pension system within a few years. The prolonged life expectancy of retirees has resulted in a gradual accumulation of pension funds at a significantly slower pace than their depletion. Consequently, experts in Germany have proposed a gradual elevation of the retirement age. By the year 2042, they aspire to raise the retirement age for employees to 68 years old.
Germany, renowned for its manufacturing prowess, comprises a labor force predominantly consisting of industrial workers, engineers, and managers. Unlike their counterparts in the United States, who predominantly engage in the service industry encompassing finance and technology, these manufacturing workers enjoy relatively substantial salaries and can swiftly accumulate wealth. Consequently, the majority of Germans can merely rely on the pension system rather than their own financial assets for retirement. Therefore, German politicians are understandably hesitant to entertain reform proposals that advocate for an increase in the retirement age, as they are disinclined to sacrifice their electoral support.
In France, the Macron administration initiated pension reform in March of this year, subsequently receiving approval from the National Assembly. One of the pivotal components of the plan entails raising the retirement age. By 2030, the legal retirement age will ascend from the current 62 years to 64 years. This reform has triggered a series of protests.
Within the realm of French politics, pension reform has been proposed for a minimum of two to three decades; however, previous leaders, with the exception of Macron, primarily indulged in empty rhetoric without taking substantial action.
The substantial increase in average life expectancy entails that the number of individuals receiving pensions and the duration of their pension entitlements significantly surpass the carrying capacity initially envisaged by the system’s designers.
Macron articulated that during the commencement of his career, France had 10 million pension beneficiaries, a number that has now escalated to 17 million. Implicitly expressing a long-term perspective, Macron has repeatedly emphasized that he undertook these reforms in the best interests of France. He could have perpetually deferred the issue, as his predecessors had done, thereby passing on the trouble to the next administration. However, he chose not to do so. Consequently, Macron is widely regarded as a highly responsible leader unafraid to shoulder the burden of responsibility.
Macron’s life trajectory and marriage choices exemplify his proactive and responsible nature, as he fearlessly expresses his opinions and acts decisively, undeterred by public opinion.
In East Asia, namely Japan and South Korea, the challenge of eldercare is even more severe. Unlike Germany and France, East Asian nations lack a tradition of relatively robust welfare systems, causing certain workers to be less attuned to pension issues. In Japan and South Korea, survival becomes exceedingly arduous for some elderly individuals. Media reports in recent years have exposed the distressing reality that certain elderly individuals in Japan resort to disreputable means to sustain themselves.
Indeed, eldercare represents a global predicament. Upon retrospection of history, numerous aspects become evident. In 1935, the Roosevelt administration in the United States enacted the Social Security Act. As the world’s largest economy, the United States commenced the establishment of an extensive national pension system. At that time, the average life expectancy of Americans stood at 62 years, with President Roosevelt himself living to be only 63 years old. Presently, the average life expectancy in the United States has risen to 79 years.
The substantial increase in average life expectancy implies that the size and duration of the pension recipient pool far exceed the carrying capacity of the system’s original design. This represents a fundamental actuarial predicament and serves as the underlying rationale behind the pension system crises witnessed in certain countries.
Nevertheless, the augmentation of average life expectancy constitutes a remarkable achievement. The objective of human economic development is to extend longevity while simultaneously fostering happiness, rather than viewing longevity as a detriment. We all inevitably grow older, and the blame for pension predicaments should never be placed upon the extension of life expectancy. To address this global issue, it is incumbent upon each individual to persist in economic development,allowing wealth to continue its growth and ensuring the long-term viability of elderly care.
While economic development cannot resolve all challenges, it holds the capacity to address a multitude of issues.
