Struggling Municipalities, Take Notice of New York’s Pension Fund
The days of well-funded pension funds seem to be dying. Successful corporations are suffering pension issues. Many public municipalities are struggling to make ends meet on the pension front. It is an epidemic of global proportions. Global retirement crisis is bearing down on workers of all ages, in fact. While the financial meltdown in 2008 and the Great Recession of 2009 triggered much of the realization of the difficulty of pension system sustainability, the problems had been brewing for years.
Now, many people will be forced to work well past the traditional retirement age of 65. Living standards will fall and poverty rates will probably rise for the elderly in wealthy countries that built safety nets for seniors after World War II. In developing countries, people’s rising expectations will be frustrated if governments can’t afford retirement systems to replace the tradition of children caring for aging parents.
An Emerging Crisis
The emerging crisis is a convergence of three factors. First, countries are slashing retirement benefits and raising the age to start collecting them. These countries are awash in debt since the recession hit, and they face a demographics disaster as retirees live longer and falling birth rates mean there will be fewer workers to support them. Second, companies have eliminated traditional pension plans that guaranteed employees a monthly check in retirement. Third, individuals spent freely and failed to save before the recession and saw much of their wealth disappear once it hit. Those factors have been documented individually. What is less appreciated is their combined ferocity and global scope.