Adequacy and sustainability of pension systems in the context of demographic ageing
The purpose of this paper is to inform discussions within the G20 Employment Working Group on the topic of demographic ageing and its implications on social protection systems. The paper reviews several of the measures that States have taken with the intention of improving the sustainability of pension systems and evaluates their effectiveness. The paper highlights that many of the measures taken have had negative distributional impacts and have significantly compromised the primary function of pension systems: to provide a secure replacement income for people in old age and prevent their ability to fall into poverty. While many governments and international institutions have framed pension reforms as an unescapable trade-off between adequacy and sustainability, unions insist that addressing the challenges of demographic ageing requires adopting a new overarching narrative, combining greater efforts to support labour market participation of excluded groups, enhanced revenue through progressive and innovative forms of taxation, and the guarantee of a decent income in retirement at the centre of this agenda.