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27 April, 2016

The Coming Pension Crisis – Citigroup – March 2016

In March 2016, Citigroup published the report “The Coming Pension Crisis.”

The study analyzes the total pension liabilities of the Governments of the 20 biggest countries in the OECD. The public debt reported in domestic accounts amounts to USD 44 billion, but if public pension commitments (implicit public debt) are taken into account, total debt triples to USD 122 billion. Those additional USD 78 billion of implicit debt are equivalent on average to 190% of GDP, an alarming figure. The report proposes: (i) That governments publish pension liabilities visible to all; (ii) Link the retirement age to increases in expected longevity, with an explicit link to mortality tables; (iii) That Social Security pensions provide a minimum level of income to the most needy; (iii) Incorporate “Collective Defined Contribution” (CDC) or “Defined Ambition” (DA) plans; and (iv) Provide incentives for developing private pension plans.

To review the report, please download it here.

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