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Cost of aging rising faster than expected

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My Take:  The IMF predicts that an extra 3 years of living on average amongst the general population will create a 9% increase in pension plan liability.  An immediate fix to this problem would take an infusion equivalent to 50% of developed economies GDP as of 2010. This ‘3 year’ is not so much hypotetical, since that’s what is being observed demographically.   If the topic of unfunded pension liabliity was not already a dark enough problem, the situation appears to becoming even a more ominous.

I am of the opinion that in the mid-latter part of our current decade we will experience a good deal of pension reform.  This reform will not be minor tweaks, but major changes.  As a result, many older and younger people are going to be VERY unhappy about what they told.  Changing ones expectations mid-game is not only bad because it undermines trust, but it also resets ones assumptions about the future.  When a person operates under certain assumptions about what they will/will not do in the future and then has these assumptions changed, the consequences can be significant.  Don’t think this process will be smooth either politically or economically.

Demographers for many years have assumed that the lengthening of lifespans would slow in developed countries. But with continual advances in medical technology, that has not happened as acutely as expected. In emerging economies, rising People worldwide are living three years longer than expected on average, pushing up the costs of aging by 50 percent, and governments and pension funds are ill prepared, the International Monetary Fund saidREAD MORE.


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