Dear all, today I would like to share with you one of the latest international news on pension systems. With participants from 16 Asian countries, the IMF held a conference, ‘Designing Fiscally Sustainable and Equitable Pension Systems in Asia in the Post-Crisis World’. The conference was running for two days, from 9th to 10th of January, in Tokyo.
“Pension reforms are high on the policy agenda of many advanced and emerging market economies, across Asia” said Sanjeev Gupta, Deputy Director of the IMF’s Fiscal Affairs Department. He added that “The conference offered an excellent opportunity to discuss how these countries can reform pension systems, while ensuring equity within and across generations.”
As you can guess from his remarks, the conference addressed the issue of pension systems both in developed and developing countries. For the advanced countries, the challenge is how to fiscally manage sustainable public pension systems, so as to respond to rapidly aging society. For developing and emerging countries, the issue is how to expand pension coverage.
With regard to pension system, many are concerned about the issue of equity. This includes the effects of different reform options on equity within generations (especially the impact on low-wage workers, who have shorter life expectancies), and across generations (how different age groups are affected by pension reforms).
To sum up, the key messages from the conference for the design of public pension reforms include: (1) the importance of ensuring that pension systems provide adequate income support for the elderly poor; (2) the need to ensure that the pension system does not run large deficits and is fiscally affordable; (3) the advantages of raising retirement ages, in response to increasing life expectancy, to improve the finance of the pension system and boost economic growth by raising labor supply; (4) the importance of increasing the share of the elderly population receiving pensions in emerging Asian countries; (5) the importance of improving the management of private pension funds to raise returns and increase transparency; and (6) the need to ensure that pension reforms are perceived as fair and that once implemented, pension reforms are not reversed.
I guess the conference awakens our views on aging society and need for appropriate pension system. As pension system demands fair and equitable rules and regulations, it must be thoroughly designed in order to provide proper social safety nets. What do you think about pension system? What should be listed on the top when designing the system?