can surely withstand adverse financial market conditions. this is consistent with the findings of our own research conducted at the bank of italy, which suggests that in order for the guaranteed return insurance scheme to be cost - effective, credible, and robust to moral hazard, the guarantee should be provided by the government and funded by properly risk - based premia. another important challenge faced by pension systems is given by the changing nature of labour markets. job mobility and flexibility may hinder the accumulation of retirement wealth. pension schemes should allow for the fact that workers may change jobs and employers more frequently than in the past, and we should also think about ways to promote the crossborder portability of pension rights. issues such as vesting periods and ( implicit or explicit ) penalty fees should be regulated and would be important to prevent any kind of predatory practice on retirement savings. finally, the pension fund industry may benefit greatly from the development of retirement schemes in emerging - market economies, as these economies will also face more or less rapid population ageing in the coming decades, with pension systems still to be developed especially in their fully - funded dimension. with the current pace of increase in living standards and the emergence of a sizable middle class, the vast potential demand for retirement saving vehicles in these economies would allow the global financial industry to generate important economies of scale and scope. at the same time, given the sheer size of the potential saving pools, competition among financial institutions should be adequately promoted and the risk of an excessive concentration of market shares properly countered. iii. ensuring the long - term effectiveness of funded pension schemes but there are also two other factors which in the future will considerably affect the ability of funded pension schemes to meet their goal of providing pensioners with adequate retirement income. the first is the crucial importance of robust economic growth. the second is the design of the decumulation phase. both funded and unfunded pension arrangements ultimately rely upon the ability of the economic system to create jobs and allocate resources to the most profitable investment opportunities. economic growth is therefore the fundamental determinant of the sustainability and adequacy of any retirement system. however, as was highlighted in the imf ’ s recent world economic outlook of the imf, in the advanced economies potential output threatens to remain considerably below pre - crisis trends, unless financial and structural policies are significantly strengthened. partly as a result of lower potential growth in the advanced countries, the weight of emerging market economies on world output is expected to increase steadily over the

liabilities. in the public sector, pension promises tend to be relatively generous ( sometimes to make up for lower current earnings relative to the private sector ) ; in some countries, they are also partially funded or paid out directly from government revenues, or their valuation and disclosure may lack transparency. because of these trends, retirement - income systems have continued to shift from public pay - as - you - go schemes and db plans to defined - contribution ( dc ) pension schemes. in the united states, for example, over the last decade the percentage of workers participating in db plans has declined further from 36 to 30 percent, while that of dc plan members has increased from 50 to 54 percent. the rising importance of dc arrangements implies that investment risks and longevity risk are increasingly borne by individual workers. over the last decade, however, financial market returns have been disappointing, and the global financial crisis of 2007 – 09 has dealt a blow to the balances accumulated by many workers on their dc pension schemes. especially hard hit were senior members nearing retirement. but the risk that dc schemes will deliver low income replacement rates is very serious also for young members. the disappointing performance of dc schemes over the last decade is likely to have sapped employees ’ confidence in the ability of the financial markets to provide adequate and secure returns. where membership is not compulsory, this may affect employees ’ propensity to join dc pension schemes and pay pension contributions. the risk that dc schemes will provide a low pension income compounds the reduction in the coverage of public pensions. the possibility of policy reversals cannot be overlooked either. in this regard, it is telling that in some countries the choice of mandatory contribution to funded dc pension schemes has been called into question. ii. what to do i now turn to some well - known policy responses to these challenges. while there is, i believe, wide consensus among academic experts and practitioners on the need for such responses, they are obviously demanding for policymakers. but it must be clear that delay in design and implementation could be very costly for our societies. first and foremost, people have to be encouraged to work longer. living longer is certainly a positive development, especially if we are in good health ( and this should not be taken for granted ). but we need to have the resources to enjoy our longer lives, which means incomes bis central bankers ’ speeches and jobs. there is no question, then, that a return to what the g - 20 defines as “ strong, sustainable and balanced growth ” is the