A decline in fertility rates in many nations is causing many people to worry that when they retire, their governments will not have enough money to provide them with social security pensions. The recent economic recession has made the problem worse.
World Bank studies show that women around the world are having fewer children. Ben Veghte is a researcher with the private, National Academy of Social Insurance, and he says fewer children, combined with the economic recession, are threatening the pensions of the elderly. "There's a concern among many that retirees don't have enough income to get by now or in the coming years," said Veghte.
In the United States, the government provides pension benefits from designated payroll taxes. But with the so-called, post World War II baby boom generation now entering retirement, there will soon be more Americans receiving benefits than the number of workers paying into the system. Social Security Commissioner Michael Astrue envisions problems by 2037.
"If Congress takes no action at all, we would be able to pay about 78 percent of our current level of our benefit payments," said Astrue.
Like the U.S., China also faces concerns about future retirement benefits.
"Because of the one child policy, their ratio of beneficiaries to workers, or to the elderly to workers, is catastrophic," said Veghte. "It's a major problem that they're having to deal with."
The global economic recession compounds the problem. Veghte explains, "In most of Europe, for example in Greece, the pensions are financed through general revenues, which means the pension system can run deficits. It runs deficits every year because they don't have their own dedicated source of revenue. And so when you have a recession, not only do you have the other demands on the budget, but you have a pension system which is also placing demands."
Earlier this year, thousands of Greeks marched to protest a cut in pensions, as the nation faced possible bankruptcy.
"We can't live off of 500 and 600 euros and now, they come and take more away," said one Greek woman. "How can we help ourselves? Our children who are unemployed? I don't understand."
In addition to cutting pensions, some European governments and the U.S. are considering reforms such as increasing the retirement age and raising taxes. Veghte says immigration is another solution. "If you can increase the number of workers that improves your ration of beneficiaries to workers and makes the system more sustainable."
Lawmakers around the world will have to make tough and often unpopular choices so current and future generations will be provided for when they retire.
