Global Agenda Council on Social Security Systems 2012-2013
Many developed and developing nations currently face the challenge of providing financial security to their population, including retirement security for the ageing and economic opportunity for the young. As life expectancy increases, new approaches are required to support ageing populations, especially in a post-financial crisis environment. Many retirement and social protection programmes are unsustainable; while costs rapidly increase, governments continue to limit their exposure. With the decline of social protection programmes and defined employer benefit systems, the role of individual responsibility has assumed critical importance. Yet many individuals have limited experience in making intelligent financial decisions.
This dilemma raises important questions about the role of government, the private system and individuals in ensuring long-term personal financial security, including:
- What is the role of government when public benefit levels reach unsustainable levels, and how can destabilization, resulting from social dislocation, be minimized?
- What is the role of the private system in a post-defined benefits world in a heightened global talent war?
- What role and preparation is required of the individual?
To answer these questions, leading scholars from government, the private sector and academia must jointly consider the experiences of different nations and assets. The magnitude of these issues, possible societal changes, levers available, issues raised, and the feasibility and impact of different models is significant. Potential approaches include identifying proven and novel ways to encourage financial literacy; leveraging intellectual capital to support a dialogue on next-generation solutions and products; redefining the concepts of work and retirement to reflect the reality of increased lifetimes; improving current social protection programmes and creating incentives for redefined work planning strategies.
- The number of people aged 60 and older reached 740 million in 2010 and will rise to 2 billion in 2050.
- The average support ratio, the number of people in working age (20-64) relative to the number of people having reached retirement age (65+), in Organisation for Economic Co-operation and Development (OECD) countries decreased from 7.2 in 1950, to 4.1 in 2010, and is projected to fall close to 2.0 in 2050.
- South Africa and Brazil provide extensive, near-universal social protection. Cash transfers, including Old Age grants and child support grants, benefit about 25% of the populations.
- Unfunded liabilities of USA pension funds are now over US$ 2 trillion.
“Pension schemes financed on a pay-as-you-go basis face increasingly unsustainable financial burdens and will often have to periodically adjust key parameters such as the contribution rate, accrual rate and retirement age in order to maintain financial balance in the face of ageing.”
Mark Dorfman and Robert Palacios, World Bank Support for Pensions and Social Security, 2012
“In 2050, the number of people aged 60 and older in developed countries will increase from 21% of the population today to 31%".1
Michele Burns, Executive Director and Chief Executive Officer, Retirement Policy Center, Marsh & McLennan Companies, USA
“We need to enable older adults to break out of their models of dependency and disability, to one of economic development and social value creation.”
Richard Blewitt, Global Philanthropy Forum, Washington DC, April 2012
The Case for an Integrated Model of Growth, Employment and Social Protection
Transforming Pensions and Healthcare in a Rapidly Ageing World
OECD Pension Markets in Focus
World Bank Support for Pensions and Social Security
Ageing in the 21st Century: A Celebration and a Challenge
5th World Day for Decent Work – Jobs for Young People
7 October 2012
International Association of Insurance Supervisors, Annual Conference
10-11 October 2012
Washington DC, USA
World Bank Core Course on Safety Nets
3-14 December 2012
Washington DC, USA
The Council believes that to address the issue of the sustainability of current social security systems, individuals, employers, the financial industry and governments must each take responsibility for specific elements of a new, holistic approach to lifetime financial security.
Current retirement and social protection programmes are unsustainable: costs are increasing significantly while governments continue to limit their exposure. Governments must improve current programmes by developing a supportive regulatory framework for new solutions, creating incentives for redefined work planning strategies.
With the decline of social protection programmes and employer-provided defined benefit systems, individuals increasingly need access to new solutions to enhance their financial security. Individuals’ ability to make intelligent financial decisions is more critical than ever to their personal security and will also impact broader economic stability.
The Council will build upon the reports Transforming Pensions & Healthcare in a Rapidly Ageing World (2009) and the call to action The Case for an Integrated Model of Growth, Employment and Social Protection (2012). It will broaden the discussion to a holistic view of formal retirement systems and beyond, assessing the issues, levers available and implications in a post-crisis world. To that end, the Council proposes to bring together leading thinkers from government, the private sector and academia to discuss the experiences of nations (including Australia, Chile, India, the United Kingdom and the United States). Such analysis will assess the magnitude of these issues and the societal change they imply, the levers available, the issues they raise, and the feasibility and impact of different approaches.
The findings of these consultations will be synthesized to inform the broader policy dialogue globally.
Research Analyst: Isabel de Sola, Senior Knowledge Manager, Global Agenda Councils, Isabel.email@example.com
Council Manager: Abel Lee, Associate Director, Insurance and Asset Management, firstname.lastname@example.org
Forum Lead: Giancarlo Bruno, Senior Director, Head of Financial Services Industries, email@example.com