PENSION For the pension industry to avoid

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Pension Crisis
In the current and future times, there will be agonizing pension crisis experienced by several nations worldwide. Solving this global crisis proves difficult due to the different state policies and regulations regarding pensions. This catastrophe is evident through the distressed financial difficulties in the pension industry (Barr 2006, pp. 6). Pension refers to savings made by employees and employers throughout their working years to have a better retirement strategy (Jousten 2007, pp. 12). The amount saved is determined by several factors such as the salaries acquired by the individuals, the rates set by pension boards and period of time taken to save. For the pension industry to avoid this future crisis, it requires interventions from the key determining elements: the government, pension fund institutions, employers and employees, whereby they need to undertake their different roles and perform them excellently to ensure the forthcoming global pension crisis is evaded by most nations.

The government determines and runs most state matters, which mostly touch on the banking and financial sector therefore affecting the pension industry. It sets and outlines different polices regarding pension plans that the state and involved parties need to comply with to ensure favorable living conditions in the old age (Mishkin and Eakins 2006). These policies include the state retirement age, rules governing pension boards like NEST (National Employments Savings Trust) and employment standards. In most states like the United Kingdom, employees are required to retire at the age of 65. These employees at this age are seen to have deteriorating health that affects their working capacity. To minimize the occurrence of the pension crisis the government ought to perform adjustments to its pension policies to ensure employees and employers save enough for their retirement. Firstly, the different state governments need to increase the retirement age to around 70 years of age to allow employees to acquire more funds for their retirement as most of them are still able to work at the age. The United Kingdom government set its retirement age to 66 and with time, it plans to increase it as life expectancy is improving (Disney 2000, pp. 18). When individuals work for long periods, they pay more taxes, which in turn increases their spending income. Secondly, the government ought to abolish provisions, which promote the ability of employees to leave their working life earlier. These provisions include early retirement schemes, where individuals are encouraged to save more and retire early. The elimination of these provisions ensures that employees work till the retirement age giving theme sufficient time to save up for a better retirement (Van Dalen and Henkens 2005, pp. 701). Thirdly, the government needs to adjust their employment policies to include the older employees (Taylor 2002). The ability of public employment to address the needs of the older employees eradicates dependency on young workers and enables their incorporation in the labor market. The government can encourage older laborers by training them on the required skills to meet the demand of the job market and discouraging discrimination in the workplaces. For the government to succeed in ensuring the aforementioned changes are done, it needs the cooperation of the employers and employees.

Employers and employees play a great role in the pension industry as they contribute the funds that facilitate it to ensure their retirement years are insured. First, employers need to have adjusted employment policies that incorporate both the young and old employees to ensure they start working in their early years and continue with their careers up to the retirement age to maximize the funds contributed to insure the after-retirement life and avoid the pension crisis in the future. Second, employees and employers need to save more money to cover their retirement plan as more funds mean more covering and spending in the old age (Banks et al. 2002). For instance, a man who saves more than $30,000 has a better retirement plan than one who saves about $10,000. Third, employers need to inform their workers of available pension schemes and encourage them to acquire them or further enroll them in both private and public plans. In most cases, people resist change but it requires persuasion and awareness on the benefits of the schemes. Peer pressure among employees also plays a significant role in the persuasion of reluctant ones to acquire a retirement scheme and informing them of the benefits and the losses incurred when one lacks the plan. Fourth, the employment policies need to accommodate women in the employment sector and encourage them to do more than just give birth to offspring and perform house chores (Ginn, Street and Arber 2001). This averts the pension crisis as it eradicates the dependability of women on their husband’s pension schemes that reduces the poverty levels in old age (Ginn 2003). For pension schemes to be put in place, they require pension institutions.
Pension boards offer services related to retirement schemes for workers. These boards can set up auto-retirement for employees and employers that involves the deduction of certain amounts from the pay slips for their retirement plans (Bodie et al. 1996). The auto-retirement plan needs to have standard and reasonable amounts that need to be deducted to ensure employees do not face spending difficulties. Additionally, they need to abolish charging individuals for consultation services regarding the pension plans as those fees can be saved instead and create better retirement times for them.

Conclusively, the occurrence of pension crisis in the near future would lead to financial difficulties and in severe cases lead to poverty. It can be averted through the involvement of the key determinants like the government, employers, employees and pension institutions. The government can adjust the state retirement age, policies governing pension boards, employment plans to incorporate women and older employees and availability of provisions like early retirement schemes. On the other hand, employers need to integrate older employees to ensure longer working periods and employees need to save more money to insure their retirement. Employers also ought to encourage employees to acquire retirement plans. Pension boards need to avoid charging consultation fees and introduce auto-retirement plans in businesses and corporations to incorporate both employers and employees. Therefore, the aforementioned parties are required to honor their responsibilities to ensure the pension catastrophe is avoided globally.
Banks, J., Blundell, R., Disney, R. and Emmerson, C., 2002. Retirement, pensions and the adequacy of saving: A guide to the debate.

Barr, N., 2006. Pensions: Overview of the issues. Oxford Review of Economic Policy, 22(1), pp. 1-14.

Bodie, Z., Mitchell, O. and Turner, J.A. eds., 1996. Securing employer-based pensions: An international perspective. University of Pennsylvania Press.
Disney, R., 2000. Crisis in public pension programmes in OECD: What are the reform options? The Economic Journal, 110 (461), pp. 1-23.

Ginn, J., 2003. Gender, pensions and the life course: how pensions need to adapt to changing family forms. Policy Press.

Ginn, J., Street, D. and Arber, S. eds., 2001. Women, work and pensions: International issues and prospects. Open Univ Pr.

Jousten, M.A., 2007. Public pension reform: A primer (No.7-28). International Monetary Fund.

Mishkin, F.S. and Eakins, S.G., 2006. Financial markets and Institutions. Pearson Education India.

Taylor, P., 2002. New policies for old workers. Policy Press.

Van Dalen, H.P. and Henkens, K., 2005. The double standards in attitudes toward retirement-the case of the Netherlands. The Geneva Papers on Risk and Insurance-Issues and Practice, 30(4), pp. 693-710.


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