Pension Crisis the World Is Essay

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Moreover, there are less children being born than in previous generations. This creates a situation where the current and future workforce will be unable to support the growing aging population. Current statistics show that there is far below the average of 2.1 children per household, which would be considered the replacement rate (Jackson & Howe 2008). For almost the entire 20th century, nations all over the world saw continuous population growths, with more being people being born than dying. Yet, today, this population growth has declined in a number of major regions, including many European nations. This then means that there will be fewer individuals in the younger workforce that should be helping support the elderly population by adding in funds to pension plans. Current structures are under the pay-as-you-go plan, where today's workers pay for today's retirees in hopes that future workers will do the same for them (Slater 2008). There are now only two workers for every pensioner (Slater 2008). This creates a situation where the workers are unable to appropriately keep up with providing money for pension payments.

People currently being paid pensions are now, on average, working less but getting paid more. The last few years have witnessed the highest pensions paid out in the last few years than ever before. Also, with life expectancies getting longer and longer, many retirees are enjoying more years paid under their pension plans (Slater 2008). Pension plans were created when life expectancy was much less. The original Prussian system was implemented when the life expectancy in that region was only around 45 years old (Wells 2005). Modern pension systems in the United States were established when the average life expectancy was around 62-65 years of age. However, the life expectancy now averages to around 78 years old, showing increased strain on the systems that fund pensions.

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With more money needed, it places a greater strain on the system.

Additionally, public pension rates are unreasonable in today's day in age. In fact, they are the largest single source of retirement income for individuals around the world. Some countries are spending as much as 8% of the GDP on paying out public pension (Slater 2008). Those numbers are said to grow to almost 18% of the GDP in some nations (Jackson 2002). Governments simply can't keep up. Currently, governments are encouraging individuals to start up personal plans or follow plans constituted by their employers, rather than relying on government funding to support public pensions (Jackson 2002). However, such governments are still obligated to pay out promised pensions, which could have a huge impact on how pensions are laid out for future generations.

This crisis clearly shows no sign of receding. In fact, it shows quite the opposite. The strain pensions are putting on the economic structures of a number of countries is becoming too large of a burden for many nations to bear. There are simply too many retirees claiming the pension benefits at the same time, with increasing lengths of time that they are being paid out. All the while, the younger workers who actually provide the funding for such payments are decreasing at an alarming rate within the modern workplace. Something clearly needs to be done. Viable solutions to help relieve some of the strain are needed, and thus legislation and government programs need to rethink current pension structures as a way to better provide for retirees both today and in the future. If personal plans were easier to create and maintain, this might help eliminate some of the larger strain......

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