The Pension Time-Bomb!

Ebrahim K Ebrahim

Pension Researcher & Chairman of the Annual MENA Pensions Conference

From a political economy perspective, a lot of governments globally face challenges in sustaining social security benefits due to changes in economic, demographic and social conditions. These are due to macro-economic conditions beyond the control of any single state; plus the inherent flaws in the legacy pension structures of the 1960s and 1970s. The increased pressure this places on government budgets has the potential to affect countries’ socio-economic stability. At the same time, better health care and an aging population are increasing pension needs just as state revenues are strained. This is what economic commentators have been calling “the pension time-bomb", meaning if such pension structures are not fixed at the parametric and systemic levels, that could lead, sooner or later, to failure in meeting their obligations towards retirees, which in turn leads to massive social unrest.