Rising life expectancies and falling birthrates are squeezing retirement systems all over the world, prompting citizens and officials in developed countries in particular to knuckle down to try to solve the problem.
Protesters in Greece, France and Spain have taken to the streets recently to forcefully protest increases in the retirement age for public pension systems. Japan has the longest average life expectancy in the world, at 83 years, and is facing a 17% drop in its working-age population by 2030, Paul Schott Stevens, president and chief executive officer of the Investment Company Institute told a gathering in London of the Henry Jackson Society, a cross-partisan British think tank. China has yet to reveal how will respond to its own imbalance of elderly citizens and workers—partly prompted by its one-child rule, Stevens said.
He addressed the group Monday at the Palace of Westminster, where the House of Lords and the House of Commons meet, bringing an American perspective to budget discussions in the U.K. and the rest of Europe, where they have often turned violent/
United States residents have been openly discontented with the country’s economic state, and its $1.3 trillion deficit in particular. In their case, however, Americans have decided to take out their frustrations at the ballot box, and are tossing around bi-partisan policy proposals on how to deal with the looming crunch.
As the U.S. and other countries tackle huge budget problem, Stevens offered three guiding principles for policymakers and citizens. First all conversations about the extent of the problems and consequences of choices need to be candid. Second, policymakers have to accept that the most promising solutions to fiscal problems will be multi-faceted and will require compromise between spending cuts and tax increases. “Only if the burdens are widely shared will the benefits be as well.”
Last, solutions must be broadly equitable in the broadest sense. “It is clear that we will have to make adjustments to our health and income programs,” Stevens said. “These adjustments must be fair to today’s retirees, and to those who will retire in the next decade.”
Stevens did praise suggestions from the National Commission on Fiscal Responsibility and Reform, co-chaired by Erskine Bowles, former chief of staff to Bill Clinton and Alan Simpson, a former Republican senator.
“For once, there are candid, clear-eyed assessments of the kind of steps necessary to stabilize our national debt,” Stevens said. “They have helped crystallize a debate that is badly needed as America—like other nations—looks ahead to meet the challenges of aging and retirement security.”