seminario internacional de afi: "¿hacia una crisis global de las pensiones?"
TRANSCRIPT
![Page 1: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/1.jpg)
I SEMINARIO INTERNACIONAL DE PENSIONES
I JORNADA INTERNACIONAL DE
PENSIONES23 SEPTIEMBRE 2015
![Page 2: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/2.jpg)
Escuela de
Finanzas
¿Hacia una crisis global de las
pensiones? Cómo afrontar una creciente longevidad
![Page 3: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/3.jpg)
Global trends in and implications of increasing longevity
by James W. Vaupel
Towards a Global Pensions Crisis?
Madrid, 23 September 2015
![Page 4: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/4.jpg)
View 1: Fixed frontier
![Page 5: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/5.jpg)
1557 80 73
1565 95 81
Luigi Cornaroyear age possible
claimed age
1540 56 56
View 2: Secret of longevity
![Page 6: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/6.jpg)
Hans Lundström
View 3: Advancing frontier
![Page 7: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/7.jpg)
Mortality at ages 85, 90 and 95 for Swedish females
0
0.1
0.2
0.3
0.4
0.5
0.6
1900 1920 1940 1960 1980 2000
Ris
k o
f D
eath
Year
Age 85
Age 90
Age 95
The frontier of survival
![Page 8: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/8.jpg)
The frontier of survivalThe decline in chances of death in Germany at ages 85, 90 and 95
1950 1960 1970 1980 1990 2000 2010
0.0
0.1
0.2
0.3
0.4
Age 85
Age 90
Age 95
Year x
q(x
)
Women
1950 1960 1970 1980 1990 2000 2010
0.0
0.1
0.2
0.3
0.4
q(x
)
Men
![Page 9: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/9.jpg)
Nu
mber
of fe
male
s a
ged 1
00+
or
105+
Year
The explosion of centenarians
The frontier of survival
2010
1369
1985
367
1860
5
![Page 10: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/10.jpg)
Nu
mber
of fe
male
s a
ged 1
00+
or
105+
Year
The explosion of centenarians
The frontier of survival
2010
2352
1973
12
1985
53
![Page 11: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/11.jpg)
MAJOR DISCOVERY:
The frontier of survival is advancing:
old-age mortality is not intractable
SUPPLEMENTAL DISCOVERIES:
What do we know about human longevity?
1. The frontier of survival is advancing – because senescence
is being delayed, not decelerated.
![Page 12: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/12.jpg)
11/33
Age
Equivalent Age 50 Years Ago
Female Male
France Swe
den
USA Japan France Swe
den
USA Japan
50 42 40 44 23 44 43 44 39
60 49 52 53 43 51 53 51 50
70 59 62 63 53 59 62 60 57
80 71 72 74 67 71 73 73 70
90 83 85 85 79 84 87 85 81
Current age and age of equivalent
mortality 50 years ago.
![Page 13: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/13.jpg)
The postponement of senescence in Germany 1970-2014
65 = 55 1970
2014
0.2%50 65 80
Mo
rtali
ty
Age
10%
1%
55.455
The frontier of survival
![Page 14: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/14.jpg)
MAJOR DISCOVERY:
The frontier of survival is advancing:
old-age mortality is not intractable
SUPPLEMENTAL DISCOVERIES:
What do we know about human longevity?
1. The frontier of survival is advancing – because senescence
is being delayed, not decelerated.
2. Life expectancy is rising linearly, with no sign of
a looming limit.
![Page 15: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/15.jpg)
45
50
55
60
65
70
75
80
85
90
95
Germany
Japan
Sweden
Iceland
Norway
Australia
Netherlands
Switzerland
New Zealand
1840 1860 1880 1900 1920 1940 1960 1980 2000 2020Year
Lif
e e
xp
ec
tan
cy in
ye
ars
The life expectancy revolution
The frontier of survival
![Page 16: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/16.jpg)
20/33
The Rise in Record Life Expectancy at Age 65
Data Source: Calculations based on Human Mortality Database from Roland Rau and James Vaupel (unpublished)
![Page 17: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/17.jpg)
22/233
Sweden
Japan
France
Year of Birth:
104102101
108107105
105104102
201020052000
Data are ages in years. Baseline data were obtained from the Human Mortality
Database and refer to the total population of the respective countries.
Oldest Age at which at least 50% of a Birth Cohort is
Still Alive Christensen, Doblhammer, Rau & Vaupel Lancet 2009, extended
Great Britain 105103102
Germany 103101100
![Page 18: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/18.jpg)
The Failure of Expert Imagination
27/33
Mortality forecasts based on expert
judgment have been less accurate
than extrapolation.
![Page 19: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/19.jpg)
28/33
The Sorry Saga of Looming Limits to Life Expectancy Oeppen and Vaupel Science 2002
1840 1860 1880 1900 1920 1940 1960 1980 2000 2020 204045
50
55
60
65
70
75
80
85
90
95
Life
-exp
ecta
ncy in
ye
ars
Dublin
Dublin & Lotka Dublin
Bourgeois-Pichat
Bourgeois-Pichat, UN Siegel
World Bank, UN
Fries, Olshansky et al.,
World Bank
UN Olshansky et al.
Coale,
UN, Frejka
UN
Year
Coale & Guo
![Page 20: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/20.jpg)
The Future Will Be Different from the Past
• In next decade or two, progress against
cancer and dementia and in developing
genotype-specific therapies
• Then progress in regenerating and eventually
rejuvenating tissues and organs
• Accompanied by progress in
replacing deleterious genes
• Aided by nanotechnologies (nanobots)
• Perhaps in a decade or two, probably later,
progress in slowing the rate of aging (as
opposed to further postponing aging).
29/33
![Page 21: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/21.jpg)
The Future will be different from the past
Since 1840, future progress in extending life
expectancy has been different from past
progress.
• The country with the longest life expectancy
has shifted from Sweden to Japan
• The causes of death against which progress
has been made have shifted from infectious
diseases to chronic diseases
• The ages at which mortality has been
reduced have shifted from childhood to old
age
30/33
![Page 22: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/22.jpg)
31/33
41021150
Age group
1850-
1901
1901-
1925
1925-
1950
1950-
1975
1975-
1990
1990-
2009
1-14 12 4 2
15-49 7 4
3 13 11
65-79 2 8 11
16
39 20
19 17
24
80+ 0 1 0 6
20
41 37
17 41
Total 100 100 100 100 100 100
Age-Specific Contributions to the Increase of Record Life Expectancy among Women 1850 to 2009 in %
3214
55 8
25 38
50-64
16
39 20
19 17
24
20
41 37
17 41
3214
55 8
25 38
Data Source: Calculations based on Human Mortality Database by Roland Rau and James Vaupel (unpublished)
![Page 23: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/23.jpg)
The Future will be different from the past
BECAUSE since 1840 future progress in
extending life expectancy has been different
from past progress,
and because experts understand the past but
have difficulty foreseeing future advances,
the best strategy for forecasting the future of
mortality is to extrapolate past trends, which
incorporate all the unforeseen advances and
shocks in the past.
32/33
![Page 24: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/24.jpg)
Healthy Unhealthy
Dead
Healthy Unhealthy
Dead
Will we live longer healthy?
![Page 25: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/25.jpg)
1980 1985 1990 1995 2000 2005 2010Year
1
Death
Rate
s
0.0
20.0
50
.10
.25
0.5
1895
1900
1905
1910
It’s never too late
East
Germany
West
Germany
![Page 26: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/26.jpg)
The life expectancy revolution: Why?
Money?
Medicine?
![Page 27: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/27.jpg)
genetics25%
childhood10%
adult life65%
Determinants of individual longevity
![Page 28: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/28.jpg)
Determinants of individual longevity
Source:
![Page 29: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/29.jpg)
Determinants of individual longevity
![Page 30: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/30.jpg)
Determinants of individual longevity
![Page 31: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/31.jpg)
Listen to
your mother
![Page 32: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/32.jpg)
MAJOR DISCOVERY:
The frontier of survival is advancing:
old-age mortality is not intractable
SUPPLEMENTAL DISCOVERIES:
What do we know about human longevity?
1. The frontier of survival is advancing – because senescence
is being delayed, not decelerated.
2. Life expectancy is rising linearly, with no sign of
a looming limit.
3. In the future we will work more years of our lives but
fewer hours per week.
![Page 33: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/33.jpg)
-4%15.3416.05USA
-5%14.2815.04UK
-5%11.9612.65Italy
-6%10.9411.69France
-7%12.2513.20Germany
Change20252012Country
H, hours worked per week
per capita
How much do we work?
![Page 34: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/34.jpg)
3.8 billion hours
5.6 million people
Implies 13 hours/week/capita
2.6 million worked, 47%
Those who worked, worked
28 hours/week/worker
How much do Danes work?
![Page 35: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/35.jpg)
Usual workweek 37 hours/week
But vacations, holidays, sick leave
reduce this to 31-32 hours
Some work part time, leading to the
28 hours/week/worker
How much do Danes work?
![Page 36: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/36.jpg)
13 hours/week/capita
2.6 million worked, 47%
Those who worked, actually
worked 28 hours/week/worker
If 5% more Danes worked,
this could be reduced to 25
hours/week/worker
And the official work week
could be reduced from 37 to
33 hours/week
Redistribution of work
![Page 37: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/37.jpg)
MALE FEMALE
World populationby five year age group, in millions
Source: UN
1950
2050
2010
100+95-9990-9485-8980-8475-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-145-90-4
300 200 100 0 100 200 300 million
2100
![Page 38: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/38.jpg)
MALE FEMALE
World populationby five year age group, in millions
Source: UN
1950
2010
2050
100+95-9990-9485-8980-8475-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-145-90-4
2100
300 200 100 0 100 200 300 millions
![Page 39: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/39.jpg)
MALE FEMALE
World populationby five year age group, in millions
Source: UN
1950
2010
2050
100+95-9990-9485-8980-8475-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-145-90-4
2100
300 200 100 0 100 200 300 millions
![Page 40: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/40.jpg)
MALE FEMALE
World populationby five year age group, in millions
Source: UN
1950
2010
2050
100+95-9990-9485-8980-8475-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-145-90-4
2100
300 200 100 0 100 200 300 millions
![Page 41: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/41.jpg)
0 5 10 15 20 25 30 35
% Old
World ≤ 15
India ≤ 15
World 65+
2010 2050 2090
% Old when old means:65+ vs. ≤ 15 years of remaining life expectancy.
India 65+
13%
16%
28%
27%
Data provided by S. Scherbov and W. Sanderson
7%
![Page 42: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/42.jpg)
79
70 75 80 852010
2030
2050
2070
2090
Germany
World
China
Year
Age when life expectancy = 15
Data provided by S. Scherbov and W. Sanderson
78 85
65
85=71
Age
![Page 43: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/43.jpg)
Live longer and longer
Live healthier at any specific age
Postpone disability to later ages
Work more years but
Fewer hours per year
Summary: Prospects for the 21st century
![Page 44: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/44.jpg)
Towards a Global Pension Crisis?
No–
If (but only if) a greater proportion of
people work,
including working at higher ages
(for example until
life expectancy -15)
![Page 45: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/45.jpg)
Towards a Global Pension Crisis?
No–
If (but only if) a greater proportion of
people work,
including working at higher ages
(for example until
life expectancy minus 15)
This reform will be so difficult in many
countries that there will be many
pension crises around the world.
![Page 46: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/46.jpg)
MaxO Odense
MPIDR Rostock
MPG Munich
![Page 47: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/47.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
I SEMINARIO INTERNACIONAL DE PENSIONES
I JORNADA INTERNACIONAL DE
PENSIONES23 SEPTIEMBRE 2015
![Page 48: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/48.jpg)
Escuela de
Finanzas
¿Hacia una crisis global de las
pensiones? Cómo afrontar una creciente longevidad
September 23, 2015
The Retirement Income Market:The Old World and the New
Clive Bolton
MD, Retirement Solutions – AVIVA UK&I Life
![Page 49: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/49.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados. 3
UK Retirement Market 2014-15
0%
20%
40%
60%
80%
100%
2014 2015 2014 2015
Jan to Mar Apr to Jun
Defer Drawdown & Part Cash Full Cash Annuity
Total Individual Annuity Market (£bn PVNBP)Pre April 2015
• Pension funds must be used to purchase a retirement
income product (few exceptions)
• Any funds passed on after death taxed at up to 55%
• Any cash withdrawals taxed at 55%+
Post April 2015
• Added flexibility – more options for customers
• Pension funds can now be withdrawn as cash if desired –
taxed at marginal rate
• Any funds passed on after death taxed at marginal rate
Customer Demand
• Call volumes in April over 150% of 2014 levels
• Many customers had been waiting to access cash
• Over 65% of April transactions were customers taking full or
part cash
• This demand is decreasing but still high (40%+) Not yet
clear what stable state will be
Customer Outcome
2013
£12bn2014
£7bnQ1 2015
£1bn
Changes announced in budget
![Page 50: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/50.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
A snapshot of the changing retirement market
4
25000
30000
35000
40000
2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2
Average annuity premiums Indicative Annual Platform Net Flows (£bn)
40
53
6056
5250
45
Range of 50+ estimates based on the assumption of 60% -
80% of net flow comes from 50+
Source: Marakon analysis
<50 yrs
50+ yrs
Source: ABI
Q1 ‘13 Q2 ‘13 Q3 ‘13 Q4 ‘13 Q1 ‘14 Q2 ‘14
£30k
£35k
£40k
£25k
Annuities Platform-based investments
![Page 51: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/51.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
How are customers feeling?
5
![Page 52: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/52.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Two specific customer segments
6
The ‘persistently passive’The ‘new breed’ investor
• New to the investment market
• £50k - £100k
• Traditionally bought an annuity
• Doesn’t relate to concept of an IFA
• Aware of new retirement choices
• Wants to engage but doesn’t know how
• No engagement with pension
• No understanding of value of pension
saving or investments
• Keeps concept of retirement at arms
length
• High level of mistrust of financial
services industry. Tars all with same
brush
![Page 53: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/53.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
The new breed investor
7
£211
£236£261
£289£317
£0
£50
£100
£150
£200
£250
£300
£350
2% 3% 4% 5% 6%
65 year old with savings of £50kMonthly income over 25yrs at different yields
![Page 54: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/54.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Product Developments
8
• Fixed Term Annuity supports 92% of
Lifetime Annuity Income
• Fixed Term Annuity offers some flexibility
• Drawdown outperforms Fixed Term
Annuities in most scenarios
• Fixed Term Annuity does not provide
significant downside mitigation
• Drawdown customers should consider
longevity risk
• Increased life expectancy increases
required yield
• Annuity purchase can be delayed
• Or longevity risk mitigation could be
bought in advance
Fixed Term
AnnuityIncome based on market
rates
Multi Asset
Drawdown (40%
equity)Withdrawals based on annuity
income
£0 £17,577
£102,380 £110,734
Residual
fund/ death
benefit
Cumulative
income taken
Return to average life expectancy (91) – Male aged 65 - £100k fund,
median performance scenario
Longevity Buy Out for Drawdown customers
Fixed Term Annuity – not a priority in the new world
Total fund returned to average Life Expectancy – Male aged 65 - £100k
fund
![Page 55: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/55.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Can a single product generate returns and provide guarantees?
9
• Starting income lower under VA
• Need to outperform risk free rates materially to
cover charges and increase income
• Higher equity exposure = higher guarantee
costs
Income levels under annuity and VA on median performance
Male, age 65, £100k fund
Equity backed VA with 1% guarantee charge
• Blends of annuity and drawdown have better
returns in median scenarios
• Only annuity outperforms blend in poor
investment conditions
• Blends provide effective downside protection
• Lifetime annuity is the most efficient method for
generating guaranteed income
Total returns to average life expectancy Male, age 65,
£100k fund
![Page 56: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/56.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
• UK has seen a massive shift in the options at retirement
• Customers will have to take far greater control of their finances and
investments
• It will take several years for the new environment to stabilise and a long
term view to emerge
• Customers who will have to use a significant proportion of their capital in
retirement are not well served
• There are some product gaps and some redundancy
• The infrastructure to tailor solutions is not yet mature
• There is a significant opportunity for organisations that crack the problem
Summary
10
![Page 57: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/57.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
© 2015 Afi. Todos los derechos reservados.
![Page 58: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/58.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
I SEMINARIO INTERNACIONAL DE PENSIONES
I JORNADA INTERNACIONAL DE
PENSIONES23 SEPTIEMBRE 2015
![Page 59: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/59.jpg)
Escuela de
Finanzas
Towards a global pension crisis? Coping with increasing longevity
Madrid, September 23rd, 2015
Are we heading towards a global pension crisis?
Nicholas BarrLondon School of Economicshttp://econ.lse.ac.uk/staff/nb
![Page 60: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/60.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Are we heading towards a global
pension crisis?
1. The backdrop
2. What are the problems?
3. What are the solutions?
4. Redefining retirement: Later and more
flexible retirement
5. Conclusion
Nicholas Barr, September 2015 3
![Page 61: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/61.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
1 The backdrop
Objectives of pension systems
• For the individual• Consumption smoothing
• Insurance
• Additional objectives of public policy• Poverty relief
• Redistribution
Nicholas Barr, September 2015 4
![Page 62: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/62.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Main argument
• Talks with journalists over the years
• Not a crisis: a problem, but a problem with
a solution
• Though it would have been an even better
solution if implemented gradually starting a
long time ago (since when have we known
about the baby boom?)
Nicholas Barr, September 2015 5
![Page 63: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/63.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
It’s not a crisis
• There is no ‘ageing problem’, nor a
‘pensions crisis’
• People are living longer – a great good
news story; not a problem but a triumph
• The problem is not that people are living too
long, but that they are retiring too soon
Nicholas Barr, September 2015 6
![Page 64: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/64.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
2 What are the problems?
Nicholas Barr, September 2015 7
![Page 65: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/65.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
2.1 Uninsurable risks
Competitive insurance is efficient if
1 Probabilities are independent
2 Probability is less than one
3 Probability is known
4 No adverse selection
5 No moral hazard• Endogenous probability
• Third-party payment problem
Nicholas Barr, September 2015 8
![Page 66: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/66.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Can insure against individual risk
but not against• A common shock (probabilities not
independent): example, average life
expectancy
• Uncertainty (probability not well known):
example, longevity
• Note that these statement are not attacks on
insurance, but technical arguments about the
nature of the actuarial mechanism
Nicholas Barr, September 2015 9
![Page 67: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/67.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
2. 2 Demographic change
• The problem is not the baby boom
• The main cause of the ‘crisis’ is a failure to adapt to long-term trends
• Many pension systems face a series of trends:• A long-term trend of rising life expectancy
• A long-term trend of declining fertility
• A long-term trend to earlier retirement
• These are more important than two more recent phenomena:
• The baby boom
• Increase in the scale of pension systems since World War 2
• There would be a problem of paying for pensions even if there had not been a baby boom
Nicholas Barr, September 2015 10
![Page 68: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/68.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Age pyramids 2050, China, India, USA (Barr and Diamond, 2008, pp 9-11)
A g e P y r a mi d f o r U n i t e d St a t e s , 2 0 5 0
40000 30000 20000 10000 0 10000 20000 30000 40000 50000
0- 4
10- 14
20- 24
30- 34
40- 44
50- 54
60- 64
70+
P o p u l a t i o n ( i n 0 0 0 ' s )
M al e Femal e
Sour ce: U.S. Census Bur eau, Inter nat i onal Data Base
A g e P y r a mi d f o r C h i n a , 2 0 5 0
150000 100000 50000 0 50000 100000 150000 200000
0- 4
10- 14
20- 24
30- 34
40- 44
50- 54
60- 64
70+
P o p u l a t i o n ( i n 0 0 0 ' s )
M al e Femal e
Sour ce: U.S. Census Bur eau, Inter nat i onal Data Base
A g e P y r a mi d f o r I n d i a , 2 0 5 0
150000 100000 50000 0 50000 100000 150000
0- 4
10- 14
20- 24
30- 34
40- 44
50- 54
60- 64
70+
P o p u l a t i o n ( i n 0 0 0 ' s )
M al e Femal e
Sour ce: U.S. Census Bur eau, Inter nat i onal Data Base
Nicholas Barr, September 2015
11
![Page 69: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/69.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
3 What are the solutions?
• If there are problems paying for pensions there are four and only four solutions
• Lower average monthly pensions
• Later retirement at the same monthly pension (another way of reducing pensions)
• Higher contributions
• Policies to increase national output
• Any proposal to improve pension finance that does not involve one or more of these approaches is illusory
• I will focus on later retirement
Nicholas Barr, September 2015 12
![Page 70: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/70.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
4 Redefining retirement: Later
and more flexible retirement
Nicholas Barr, September 2015 13
![Page 71: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/71.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
4.1 What is the purpose of
retirement?• Mandatory full retirement made sense
historically, to clear out dead wood
• Since then, two changes• People are living longer healthy lives, and so are able to
work longer
• But society is also richer; thus we can afford to give people a period of leisure after working life
• Thus the purpose of retirement has changed. It is a social institution to give people a period of leisure after working life
Nicholas Barr, September 2015 14
![Page 72: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/72.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
4.2 Later retirement
• Gains in life expectancy should be shared
between longer working life and longer
retirement
• Thus on average people will work longer
than their parents but also be retired for
longer than their parents
Nicholas Barr, September 2015 15
![Page 73: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/73.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados. Nicholas Barr, September 2015 16
Later retirement: Why?
• Longer healthy life + constant or declining retirement age creates problems of pension finance
• The problem is not that people are living too long, but that they are retiring too soon
• The solution: pensionable age should rise in a rational way as life expectancy increases
• Most work is less physical than in the past
• The ‘lump of labour’ fallacy
• Response to the crisis: another way of sharing risk; if they have to bear some of the cost, many pensioners would prefer a shorter duration of retirement to lower living standards in retirement
![Page 74: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/74.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados. Nicholas Barr, September 2015 17
The UK as an illustration
16.2
14.1
47.6
53.1
20.1
10.8
0 10 20 30 40 50 60 70 80 90
2004
1950
Education, work and retirement
Life course, men retiring in 1950 and 2004
![Page 75: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/75.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados. Nicholas Barr, September 2015 18
18
Later retirement: How
• Changes should be announced a long time in advance
• Rules should relate to date of birth, not date of retirement
• Changes should be made annually (or monthly), to avoid large changes across nearby cohorts
• The rules should be explicit
![Page 76: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/76.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
4.3 More flexible retirement
• Given the changed social purpose of pensions, increased choice about when to retire, and whether fully or partially is desirable for its own sake, irrespective of any problem with pension finance
• Why does a policy with such obvious advantages not happen? Answer: there are impediments
• Important to identify those impediments; once recognised, they can be acted upon
Nicholas Barr, September 2015 19
![Page 77: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/77.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Impediments that discourage
individuals from working longer1. Well-informed preferences, in which case there is no
problem
2. Attitudes• State pension age is an important signal
• We are all systematically badly-informed
3. Rigidities in labour markets: the key rigidity is the extent to which labour markets are still heavily geared to a binary choice – no work or full-time work
4. Rigidities in pension design• Binary choice: no option to draw partial pension (contrast
Sweden)
• Pure final salary is death to downshifting
Nicholas Barr, September 2015 20
![Page 78: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/78.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Impediments that discourage
employers from hiring older workers1. Age discrimination: but mistaken to obsess
as though that was the entire problem2. Fixed costs of employment
• Medical insurance, travel insurance or life insurance militate against part-time work
• Premiums that rise with age militate against employing older workers
3. Legal impediments• May make it hard for wages to reflect a move to less-
demanding work• Legal uncertainties can create a hassle factor for
employers where older workers want to negotiate a reduced workload
Nicholas Barr, September 2015 21
![Page 79: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/79.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Cont’d
4. Rigidities in labour markets (e.g. flexible
pay)
5. Skills of older workers are an issue (though skills have a shorter life than in the past)
6. Health: reality v employer perception
Nicholas Barr, September 2015 22
![Page 80: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/80.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Policies to assist later and more
flexible retirement• Policies to change attitudes:
• Increasing pension age important because of the signal it gives
• Thinking more intelligently about the age of society
• Policies to encourage workers to continue• Provide access to training for older workers
• Avoid a pension penalty from continuing work
• Partial deferral
• Policies to facilitate employers hiring older workers• Age discrimination: enforce the law rigorously
• Avoid fixed costs of employing a worker
• Review employment law to reduce transactions costs and legal uncertainty where a worker wishes to downshift
• If health is an issue, consider some sort of subsidy
Nicholas Barr, September 2015 23
![Page 81: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/81.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
What about youth
unemployment?
• ‘Lump of labour’ fallacy
• Economic theory: labour markets adjust
• Evidence: if later retirement led to higher
youth unemployment, countries with later
retirement would have more youth
unemployment. That is not the case
Nicholas Barr, September 2015 24
![Page 82: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/82.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
5 Conclusion
• The main cause of the pensions ‘crisis’ is
a failure to adapt to long-term trends
• The main solutions to pension finance are
a combination of lower monthly pensions,
later retirement, higher contributions and
output growth
• Main policy conclusion: later and more
flexible retirement
Nicholas Barr, September 2015 25
![Page 83: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/83.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
ReferencesFor a summary of the issues
Barr, Nicholas (2012), The Economics of the Welfare State, OUP, Ch. 7
Barr, Nicholas and Diamond, Peter (2009), ‘Reforming pensions: Principles, analytical errors and policy directions’, International Social Security Review, Vol. 62, No. 2, pp. 5-29
For broader discussion
Barr, Nicholas and Diamond, Peter (2008), Reforming pensions: Principles and policy choices, New York and Oxford: OUP.
Nicholas Barr, September 2015 26
![Page 84: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/84.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
© 2015 Afi. Todos los derechos reservados.
![Page 85: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/85.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
I SEMINARIO INTERNACIONAL DE PENSIONES
I JORNADA INTERNACIONAL DE
PENSIONES23 SEPTIEMBRE 2015
![Page 86: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/86.jpg)
Escuela de
Finanzas
¿Hacia una crisis global de las
pensiones? Cómo afrontar una creciente longevidad
September 23, 2015
Gestión de la longevidad, innovación social
y cambios culturales
Elisa Chuliá(UNED and Funcas)
![Page 87: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/87.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Framing longevity: the sake cup anecdote
Title
3
A callous consequence of society’s ageing or an adaptive response to rising longevity?
![Page 88: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/88.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Nearly nine out of ten Japanese citizens
consider aging as a major problem
4
![Page 89: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/89.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Four reasons for why old age appears to be unhappy:
(1) It withdraws us from active pursuits
(2) It makes the body weaker
(3) It deprives us of almost all physical pleasures
(4) It is not far removed from death
(1) It is not by muscle, speed, or physical dexterity that great things are achieved, but by reflection, force of
character, and judgement; in these qualities old age is usually not only not poorer, but is even richer.
(2) … it is our duty… to resist old age; to compensate for its defects by a watchful care; to fight against it as we
would fight against disease; to adopt a regimen of health; to practice moderate exercise…
(3) … in pleasure's realm there is not a spot where virtue can put her foot. … if reason and wisdom did not
enable us to reject pleasure, we should be very grateful to old age for taking away the desire to do what we
ought not to do.
(4) …my old age sits light upon me (…), and not only is not burdensome, but is even happy. And if I err in my
belief that the souls of men are immortal, I gladly err, nor do I wish this error which gives me pleasure to be
wrested from me while I live.
Cicero: De Senectute
5
![Page 90: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/90.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Missing trust in economically comfortable old age
6
![Page 91: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/91.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Are concerns justified? Yes
- Crisis of confidence in future pensions despite recent reforms.
- Family change, mobile workforce and likely decreasing informal caregiving
capabilities.
- Pervasive unemployment.
Are social attitudes consistent with these concerns? No (not yet).
- Unscathed welfare-statism (WS may be financially under pressure, but not
ideologically or politically).
- Maintained (or even increased) demand of public services.
- No public debate about how to manage rising longevity from an economic, social
and individual perspective.
Focus on the Spanish case
7
![Page 92: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/92.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Source: CIS (www.cis.es)
(Surveys administered in July 2013 and 2014)
8
Total population Students
Spaniards pay on taxes… 2013 2014 2013 2014 much 69 69 59 57 moderate 25 25 29 25 little 3 2 5 2 Don’t know 3 4 8 16
Total Population Students Pensioners The state devotes too few resources to …
2013 2014 2013 2014 2013 2014
Social Security/ pensions 58 65 57 66 51 55 Health 66 68 60 65 64 64 Dependency 69 73 63 69 59 63
Public opinion on welfare: the more, the better
![Page 93: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/93.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
• “The traditional welfare state has in fact placed us on a path where it is difficult to
turn back” (Morley- Fletcher, 2002:49). This is true not only for technical reasons,
but also for social and political reasons.
• Structural reform packages and radical policy innovation are unlikely in European
countries in the short and medium term, even under conditions of economic
recession and intense reform pressure. If the EU institutions refrain from taking
“aggressive action” (f.i., through regulatory Social Security framework), policy
change will be probably patchy and path dependent, more or less effective in
terms of cost containment.
• Eppur si muove! Longevity is already changing labor market and employment
behavior. Longer working lives could also favor changes in the long-term care
markets and social innovation among elderly people.
Institutional solidity and social change
9
![Page 94: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/94.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Adapting to longevity: Progressive delay in retirement age
10
Average effective age of retirement
Source: OECD
![Page 95: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/95.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Adapting to longevity: Changes in the Spanish
elderly workforce
11
[Data calculation and graph design by Prof. Luis Garrido (UNED)]
![Page 96: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/96.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
Adapting to longevity: Changes in the Spanish
elderly workforce
12
Source: LFS [Data calculation and graph design by Prof. Luis Garrido (UNED)]
Employment rate of Spanish men and women born in Spain (53-64) by level of education
![Page 97: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/97.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
• The rise in longevity is too often framed in terms of “the ageing problem”. Though
unsound, this prevailing perspective is understandable since many people reasonably
fear that old age will bring economically tough times. These fears should be effectively
countered through information and persuasion about the need of social and individual
adaptation to longevity.
• In general, European governments and sociopolitical actors, trapped in the dynamics
of electoral politics, have not helped citizens to understand the magnitude of the
demographic change and its social and economic implications. Despite the crisis of
confidence in future pensions, welfarestatism remains strong in many countries and
encumbers appropriate policy change in a sort of vicious circle.
• Nevertheless, changes in labor market and employment behavior suggest that old age
cohorts are already responding to increasing longevity through later retirement and
longer working lives. The supply of jobs for people in the final work career stage may
be a challenge, particularly for low-skilled workers. But given the expected massive
demand in care services during the next decades, governments could incentivize a
privileged access of these workers to caregiving jobs.
Final remarks
13
![Page 98: Seminario internacional de Afi: "¿Hacia una crisis global de las pensiones?"](https://reader034.vdocument.in/reader034/viewer/2022051503/5882e57e1a28ab33258b6fcd/html5/thumbnails/98.jpg)
Escuela de
Finanzas
Afi Escuela de Finanzas, 2015. Todos los derechos reservados.
© 2015 Afi. Todos los derechos reservados.
Goya, Aún aprendo [I’m still learning]
ca. 1828