Solutions to finance issues for the older adults
- Raise the eligibility age in statutory private and public pension systems, abolish the mandatory retirement age and maintain the momentum towards ending early retirement.
Lengthening working lives is an important element of the answer to the challenge of population ageing. By encouraging older citizens to remain in the market for labour and therefore employment, the incentives to retire early that are built into public and private pension arrangements should be eliminated. The barriers and disincentives for older adults as well, who want to continue working. Caution should be taken to ensure that older workers do not opt out of the workforce for purposes of claiming other benefits, such as incapacity benefit, as a substitute for early retirement.
Mandatory retirement should be abolished and retirees should be allowed to work while drawing benefits. Raising the eligibility age in statutory pension systems, often by a large margin, will also be necessary as a response to increased longevity. It will be justifiable given the improved health of the elderly and the physically less demanding nature of many jobs.
- Reduce the exposure of individuals to financial risks in funded systems by improving the governance of the pension industry, amending the design of defined contribution plans by promoting life-cycle portfolios and greater flexibility in the timing of annuity purchases, and promoting flexible defined benefit plans.
The financial crisis has led to substantial losses in pension fund assets around the world, highlighting the need to limit the exposure of individuals to the financial risks associated with funded arrangements. Pension fund risk management and supervision need to be improved to reduce exposure to unduly risky investments. For 2019 get a quote at www.medicareadvantageplans2019.org for medicare advantage plans for 2019.
- Policy-makers must make pension reform credible and sustainable, by specifying a long-term trajectory of pension contributions and withdrawals, as well as a mechanism that makes this trajectory enforceable and difficult to change in response to political contingencies.
The financial situation has heightened the need to review the fashion and implementation of pension systems. In fact making the pension system in most countries will require substantial adjustments in terms of contributions and benefits. Notice in good time concerning measures like increasing the retirement age or reducing the replacement ratios of public pension systems is key. But it is also essential that policy-makers outline a sustainable plan so that future policy-makers are unable to diverge from the plan unless the unprecedented extreme circumstances. This will enable people to design decisions on their savings and investments in labor, and it will increase their acceptance of reform.