The Dialogue of Civilizations has published a special report on pensions by Manuel Montes and Manuel Riesco.
The global financial crisis and its aftermath in the past decade have resulted in inadequate retirement coverage for many. Privatised, savings-based, or ‘funded’ pension schemes, which had become popular in the previous three decades, were replaced during the era of ‘financialisation’. Savings were instead invested in other financial assets, propelled by capital gain objectives. In developed countries, the last decade has seen numerous failures in subnational pension funds.
Inadequate pension systems represent an existential threat to economies and the social fabric of many societies. This report will evaluate the pension crisis from two viewpoints: (1) the economic sustainability of pension systems, and (2) pension systems as a representation of a society’s values. There are many origins of these crises: the design of pension systems; long-term trends; the changing nature of financial markets; and sociocultural factors. The role of these issues in regards to pension systems will be evaluated in this paper, and the potential impact of an unresolved pension crisis will be discussed and recommendations for a way forward will be presented.
The report gives an overview of risks and theories of pension systems, an in-depth analysis of the crisis, long-term trends as well as proposals for reform and recommendations.
Manuel F. Montes is a senior advisor on finance and development at the South Centre in Geneva. He was previously chief of development strategies at the UN Department of Economic and Social Affairs (UNDESA) where he led the team that produced the World Economic and Social Survey (WESS).
Manuel Riesco was the external research coordinator for UNRISD Project on Social Policy in Late Industrializers: Latin America.
At the time of his collaboration with UNRISD, Riesco was director of the School of Economics, ARCIS University and of the National Centre for Alternative Development Studies (CENDA), Chile.