Pensions are under attack internationally. Covid has put pressure on the public finances of European economies, so it is essential to ensure sustainable pension systems and to “encourage” business continuity.
The message contained in an IMF paper on pension reforms in Europe is in line with the government’s intention to put the pension plan introduced by Lega in years in power with the M5S system in the attic.
“Measures to encourage late retirement and public scheme consolidation tools – IMF analysis reads – can support pension adequacy” in line with debt needs. The Covid crisis, the continuation of the study prepared by the Fund’s European Affairs Department – could require greater efforts for pension reforms in the future. This is due to the fact that the crisis contributed to a wave of increase in public debt, although it was amortized by low interest rates, but the costs of the crisis have heavily burdened the younger generations, and also in terms of scars and human capital losses.” The report warns that governments “will have to Thus, to enhance the resilience of economies and social security systems in particular against future shocks, reinforcing the need to ensure fairness, equity and sustainable pension systems in a post-Covid-19 world.”
In general, therefore, “more efforts are needed to ensure the long-term sustainability of pension systems” in Europe. Reforms implemented in recent decades have raised the retirement age, but in any case in many countries it is expected that “pension and deficit spending will increase and remain at high levels for decades to come, fueled by an aging population.” Moreover, most pension systems rely on large government transfers that erode the resources needed for interventions for a more environmentally sustainable and more inclusive economy.
Then the Fund’s economists point the finger at the generational gaps. “Compared to current retirees, future generations will have public pensions later in life and will receive fewer benefits,” fueling differences that can put pressure on the long-term sustainability of finances. Addressing “future risks requires reforms to ensure sustainability and equality between generations” by addressing imbalances through a more equitable distribution of burdens between generations. Economists at the International Monetary Fund conclude that “reforms that appeal to shared principles of equity coupled with greater financial education can be more socially and politically attractive.”
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