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Title: Ageing populations Post by: James Cormack on August 08, 2009, 18:54:14 PM Of course, a massive economic problem is that of ageing populations; something that will inevitably affect developed nations around the world. For one thing, Pay-As-You-Go (PAYG) pension schemes; the main source of retirement income in developed countries; are increasingly redundant as the retired proportion of society grows and the working proportion shrinks.
Personally, I found myself in agreement with The Economist's view (http://www.economist.com/opinion/displaystory.cfm?STORY_ID=13900145) that we are destined to eradicate a mandatory retirement age. Do you think this would be an effective change? What other reforms would you advocate? Title: Re: Ageing populations Post by: Alex Boardman on August 12, 2009, 04:11:14 AM Apparently companies in the US are all moving away from fixed pension schemes and lot of them are using 401K plans, which it is more up to employee to do the contributing and then the employer will then can match the contribution. The big talk in the industry, is that the UK should do this as it makes it more flexible for companies who are struggling with their huge pension costs. That is one of the solutions they are looking at over here in the US at the moment.
Title: Re: Ageing populations Post by: James Cormack on August 12, 2009, 13:09:30 PM Apparently companies in the US are all moving away from fixed pension schemes and lot of them are using 401K plans, which it is more up to employee to do the contributing and then the employer will then can match the contribution. The big talk in the industry, is that the UK should do this as it makes it more flexible for companies who are struggling with their huge pension costs. That is one of the solutions they are looking at over here in the US at the moment. Very interesting. I'd say it makes sense to encourage individuals to save towards their retirement on their own, and for companies to agree to match their contributions sounds like a good system of incentives. Perhaps this could be one of the silver linings of this recession: during this period of mass cost-cutting, companies have an opportunity to alter their pension plans as you describe, moving towards a solution to this macroeconomic threat. As they say, "don't waste a good recession". In the UK, Aon already led the way in this regard, back in April. I am no specialist but this sounds like your description of a 401k plan to me: "The company employs 5,000 staff in the UK, most of whom will receive only a 6% standard employer contribution to their money purchase pension scheme. However, Aon will match extra contributions made by the staff." - BBC (http://news.bbc.co.uk/1/hi/business/7988979.stm) Who knows... Maybe this was a catalyst for change in UK pension schemes! I couldn't speak for the USA. |