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90% of World's Workers May Retire Into Poverty

Wed, 06/07/2000 - 12:00am — Karen Stevenson
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A United Nations International Labor Organization issued a report warning that about 90% of the world's working-age population is at risk of retiring into poverty because of inadequate pension benefits. The report noted that many developing countries are unable to collect the money owed them and pay benefits, and many wealthy countries are being forced to reduce retirement benefits either by raising the entitlement age or reducing cost-of-living increases.

Member countries of the Organization for Economic Cooperation and Development, which includes developed nations in North America and Europe and also Japan, already are spending 10% of their gross domestic products on retirement benefits, more than they are spending on health care. Spending on retirement benefits continues to rise as populations age.

The International Labor Organization said that "there is almost no country throughout the world where the reform, development, adjustment, improvement or modification of pension schemes does not appear on the political agenda. Within the next few years, the international landscape of income protection in old age may have changed beyond recognition."

At the same time, countries which didn't have pension programs in the past are beginning to implement them. Many Asian countries don't have mandatory pension schemes, but Hong Kong is instituting one, China is planning to overhaul its pension programs, and other Asian countries are adding or expanding their pension programs.

The International Labor Organization suggested that countries increase benefit entitlement ages and increase the number of working women to expand the number of workers paying into the system. They also advised against what they call "one of the most fashionable panaceas" for relieving the financial burden on pension systems ?- investing pension funds in the stock market. They caution that "people may save up to 30% more than they need ?- which would reduce their spending during their working life, or they may save 30% too little ?- which would severely cut their spending in retirement. Which way round cannot be foreseen at the beginning of a working life."

A United Nations International Labor Organization issued a report warning that about 90% of the world's working-age population is at risk of retiring into poverty because of inadequate pension benefits. The report noted that many developing countries are unable to collect the money owed them and pay benefits, and many wealthy countries are being forced to reduce retirement benefits either by raising the entitlement age or reducing cost-of-living increases.

Member countries of the Organization for Economic Cooperation and Development, which includes developed nations in North America and Europe and also Japan, already are spending 10% of their gross domestic products on retirement benefits, more than they are spending on health care. Spending on retirement benefits continues to rise as populations age.

The International Labor Organization said that "there is almost no country throughout the world where the reform, development, adjustment, improvement or modification of pension schemes does not appear on the political agenda. Within the next few years, the international landscape of income protection in old age may have changed beyond recognition."

At the same time, countries which didn't have pension programs in the past are beginning to implement them. Many Asian countries don't have mandatory pension schemes, but Hong Kong is instituting one, China is planning to overhaul its pension programs, and other Asian countries are adding or expanding their pension programs.

The International Labor Organization suggested that countries increase benefit entitlement ages and increase the number of working women to expand the number of workers paying into the system. They also advised against what they call "one of the most fashionable panaceas" for relieving the financial burden on pension systems ?- investing pension funds in the stock market. They caution that "people may save up to 30% more than they need ?- which would reduce their spending during their working life, or they may save 30% too little ?- which would severely cut their spending in retirement. Which way round cannot be foreseen at the beginning of a working life."