Chapter 12 - Pensions and the Curse of Long Life

Summary

This chapter first identifies (1) how an older population threatens public pensions, (2) some popular counter-arguments that discount pension fears, and (3) the budgetary logic that pension programs must respect. It then provides a twenty-first century global geography of which countries have been courting pension trouble and which have been insuring themselves against it. There follow predictions of which countries will have, and which will not have, budgetary leeway to improve the generosity of public pensions by 2050, without raising tax burdens and without forcing cuts elsewhere in the government budgets. Many countries has no such leeway, given their likely economic growth and their speed of population aging. Finally, to these results about fiscal sustainability is added a listing of some countries that are most guilty of short-changing investment in the young in favor of transfers to the current generation of elderly. Appendix C adds budgetary algebra and each country’s forecasted leeway to 2050.