Retirement systems: demographics, funding and reform

Introduction

In 1970, every retiree was backed by more than five workers paying into the system. Today, in most developed countries, that ratio has fallen to roughly two-to-one. By 2050, it may drop below two. This is not a worst-case scenario, it is the arithmetic of a demographic shift that has been unfolding for decades.

Public debate on retirement tends to collapse into two arguments talking past each other: ‘the system is unsustainable’ on one side, ‘hard-won benefits are under attack’ on the other. But the retirement challenge is not, at its root, a political problem. It is a math problem (one set by demographics and compounded by longevity) to which different societies are trying different financial answers.

This Fundamental gives you the building blocks to understand why pension systems are under pressure everywhere, what the two core funding logics actually involve, and how countries around the world are responding to a challenge that belongs to every ageing society, not just any single government.