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Forum

The Cost of Growing Old: Challenges for European Pension Systems

Pension reform has been on the agendas of many European policymakers for the better part of the last three decades. Undoubtedly, most will need to re-evaluate their systems due to the coronavirus crisis, at least temporarily. With Europe’s ageing populations, declining fertility rates and increasing life expectancy, the associated rise in the old-age dependency ratio puts strain on unfunded, pay-as-you-go pension systems. This implicit pension debt has important macroeconomic implications.

It is necessary to look at a country’s history and key features of its pension system in order to understand the related policy discussion. In this Forum, Mikkel Barslund, Daniele Franco, Pietro Tommasino, Hervé Boulhol, Martin Werding and Tarmo Valkonen analyse the effects of different pension arrangements – with a focus on the challenges, history and demographics of Finland, France, Germany and Italy – on labour markets, on national growth, and on the distribution of burdens and benefits.

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Editorial

The Pandemic Requires a Coordinated Global Economic Response

If economic leaders continue to act at a national level, as has been the case for the past few weeks, there is a risk of a race to the bottom and beggar-thy-neighbour policies. The Covid-19 pandemic is a symmetric global shock that equates to vanishing demand globally – with instances of a negative supply shock and, thus, shortages, for some sectors. Such shock requires fiscal and monetary stimulus in a coordinated manner. Alicia García Herrero details the steps needed to reduce the economic impact of the coronavirus pandemic and warns: “There is no time to lose.”

The Pandemic Requires a Coordinated Global Economic Response

Forum

The Finnish Pension System and Its Future Challenges

Tarmo Valkonen tackles some of the challenges facing the Finnish pension system - arguably one of the more successful pension programmes in Europe in terms of fiscal sustainability and coverage - including life expectancies among socio-economic groups and changes in the structure of labour markets. Finland's automatic sustainability stabiliser that links the pension age to life expectancy is a key feature, one that is now being instituted in a number of EU countries such as Italy and possibly in France as well.

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Coronavirus Crisis

The Coming Coronavirus Crisis: What Can We Learn?

The coronavirus pandemic is rapidly changing health conditions, daily life, social relationships and economic prospects around the world. It is important to learn the key lessons of its economic consequences and open up a debate on the possible actions that can set our societies on a more stable, healthy, egalitarian and sustainable trajectory of development. Matteo Lucchese and Mario Pianta argue that it would be a mistake to believe that, once the pandemic has passed, the economy could go back to ‘normal’. It is necessary to rethink production and consumption in light of health and environmental needs.

The Coming Coronavirus Crisis: What Can We Learn?

Letter from America

Public Pension Reform in the U.S. Presidential Campaign

Currently, the U.S. public pension system, known as Social Security, expects that by 2035, dedicated revenues will cover just 80% of the pension payments promised under today’s benefit formula. And the developing coronavirus crisis may decrease that estimate. Still, this issue has not played a significant roll in the 2020 presidential campaign - despite Democrats' efforts to raise interest. Gary Burtless looks at the candidates and where they stand on Social Security reform.

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