What to do about retirement ages
Perceptions of a looming financial crisis in pay-as-you-go state pension schemes, especially in Europe, have led governments to search for ways to reduce the long term rate of growth of public pension liabilities. European governments have before them three possible approaches to pension reform. The first is wholesale privatisation along Latin American lines. The second is to preserve the existing PAYG schemes, but with some cost reducing parametric changes. The third approach, and the one most likely to be followed, involves partial privatisation combined with some changes to the parameters of existing public schemes. Indeed, many governments are already introducing changes to the rules of their public schemes, including reductions in scheme generosity and increased contributions. Some countries are also considering increasing the state retirement age. Given increasing longevity, increases in state retirement ages seem entirely logical.