What’s wrong with the World’s pension systems today?
Living longer should be perceived as a dream-come-true and as great achievement, but instead it is perceived as a “Longevity risk” and as a problem. How come the cure for cancer be perceived as a condition in need of cure?
Time to reverse the course to welfare state, and move on finally to Laissez-faire.“Longevity risk, the chance that people will live longer than expected, is potentially very expensive. Never mind the dramatic impact of a cure for cancer: adding an extra year to the average lifespan increases the world’s pension bill by 4%, or around $1 trillion, according to the IMF.”
There are two good developments in the article to go along the otherwise shortsighted, narrow-minded text:
1) There is empirical prove of significant extension of life expectancy – that includes both the actual lifespan period (which has risen more than 15% over the last 33 years) and the people’s perception of longevity exponent (the slope of the expected values has gradually become more than 4 times steeper for the same period).
2) There is a need and as a response – a visible change in the thinking among financial minds. First (speaking about the need for change) the annuities and other ill-fated brainchildren of the Enlightenment have done their due and are expandable. The change will bring us a new set of financial instruments engineered for the exponential (as opposed to linear) finance.