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Pension Crisis

In: Business and Management

Submitted By Michal75
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`THE DEVELOPED WORLD IS AGEING AND IS THERFORE FACING A PENSION CRISIS`

WORDS COUNT: 797

DATA: 10/03/2012
Going back through human history elderly people were only tiny minority of the population. In 1935 when Social Security Scheme was introduced to prevent poverty in old age elderly people accounted for only 3 to 4%of the population. Nobody suspected that in the future the developed world would face pension crisis caused by shifting demographic. Rising longevity and falling birth rates would cause a lower ratio of workers per retire,which will result in difficulty in paying for state or federal pension. Nowadays people are living longer than ever before and retirement pensions have become a problem. At present “developed countries are experiencing a dramatic and unprecedented demographic transformation” (Jackson and Howe, 2008) which may lead to pension crisis in the nearer future. This essay highlights two key problems that are causing development world aging and emphasise the importance for solution to prevent developed countries from pension crisis.

The fact that developed countries are aging is a result of two fundamental trends like falling fertility and rising longevity. Falling fertility is reflected in a decrease in the number of young people. Declining birth rate is a result of changes in women`s life styles. Nowadays women in developed countries getting higher education and taking paid jobs; career comes before having babies. This means getting married later and compromising on having only one child. A declining birth rate leads to fewer young people. According to Jackson and Howe, (2008) in Britain there are more people over 65 than under 18 years old. They also cite that falling fertility may be one of the reasons why by 2015 the working age population will stop growing and begin to contract. This will also mean that economic growth will…...

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