Global Pension Crisis: Unfunded Liabilities and How We Can Fill the Gap

CHAPTER 3

You Can't Build Your Walls High Enough

The next 40 years of economic life will be dominated by one underlying theme: dealing with the retirement income security of a growing, aging, and longer-living global population. This is a “can't run, can't hide” problem that will affect the lives of almost every human being on the planet. This is what I mean by this chapter's title of “you can't build your walls high enough.” Whether you are light in your pension account, whether you have more money than Croesus, whether you live in the well-funded Netherlands, or whether you are a put-upon unambitious young male in Japan who sees no future for himself, you cannot escape this problem.

THE PROBLEM OF RETIREMENT INCOME SECURITY

You can segment the world into richer and poorer with regard to funded pension assets, but that does not tell the whole tale. As we have shown, you need to look at the demographics to see how the age dependency impacts the demand for pension funding and the gap that is created. And then you have to look at the amount of burden that creates on the working population. Once you have done that, you need to do some degree of projecting of future GDP growth and population growth in order to determine the degree of problem facing a given country or region. But remember, even Switzerland and The Netherlands are surrounded by countries that have massive and looming pension issues. Indeed, The Netherlands is in the European Union and uses the Euro, where Switzerland ...