The issue of pension reform has become a central topic of public debate, although it could be the subject of consensus. The financial balance of pension systems relies on known variables such as life expectancy, the ratio of active to inactive individuals, and economic growth. However, the trends for these variables are not favorable: life expectancy gains will continue at a slower pace, the active-inactive ratio will deteriorate due to declining fertility rates and restricted migration flows, and economic growth will remain limited. The ultimate risk is the collapse of pension systems, leading to only minimal retirement benefits, forcing retirees to continue working or rely on pension funds.
In these circumstances, it seems difficult not to explore various strategies to preserve the pension system: innovation to increase productivity gains, family policies to boost fertility rates, professional immigration, and adjusting the retirement age to rebalance the active-inactive ratio. One example is Belgium, where interprofessional negotiations in 2018 led to an agreement gradually raising the retirement age to 67. Within this reform, individuals in “demanding” professions could either receive a higher pension or retire earlier by two to six years, but not before the age of 60. This tailored approach takes into account the diversity of situations and preferences among workers.
The key to addressing pension reform is a graduated approach based on the hardship of work as its cornerstone. Most workers aim to retire when they reach the eligibility age for full retirement benefits. However, some prefer to extend their professional lives until they reach 70 years old, while others facing challenging working conditions wish to retire as early as possible. By considering these differing preferences, a more flexible and inclusive approach to retirement age can be established, ensuring a fair and equitable system for all workers.
The shift towards a capitalization-based pension system, common in Anglo-Saxon countries, would disadvantage the less affluent social classes in society. Moreover, the challenges posed by declining fertility rates, limited economic growth, and shifts in the active-inactive ratio necessitate the exploration of multiple avenues to sustain the pension system. This includes increasing productivity gains, fostering policies that support family well-being, attracting skilled immigrants, and reevaluating retirement age parameters. By addressing these various factors, a more resilient and adaptable pension system can be established, ensuring financial stability and fair benefits for all retirees.
The evolving landscape of pension systems requires a comprehensive approach to safeguard the future of retirement benefits. By acknowledging the demographic, economic, and social challenges facing pension schemes, policymakers can implement tailored solutions that address the diverse needs and preferences of workers. Through a balanced and equitable system that takes into account the hardship of work and individual circumstances, the sustainability of pension systems can be ensured, providing security and stability for retirees in the long term. By fostering a collaborative and inclusive dialogue on pension reform, a more sustainable and effective system can be developed, meeting the needs of both current and future retirees.
