In particular, he argued, public pension systems can no longer bear the full burden of providing pensions and efforts must be made to achieve a more balanced pension programme with a sufficiently large funded component. What is more, pension programmes should no longer encourage early retirement nor should they hamper labour mobility. And there needs to be greater competition in private pension provision. These retirees will live much longer than at present. The number of children is falling.
Workers tend to retire at much younger ages than previous generations.
An alternative is that future generations 'foot the bill' for current generations by continued government borrowing. Neither of these outcomes sounds appealing in an economy that intends to promote growth. A third option is that some pension promises are broken. Although such an outcome may endanger the credibility of pension programmes, credibility is also eroded by not taking action when everybody is aware that current arrangements are no longer sustainable. A serious risk is that pension reforms take a short-term perspective, because of political constraints.