Speaker(s): Fernanda Salas ( VITALIS)
As life expectancy rates increase all over the world, the menace of an epidemic of poverty in the old age looms ever larger in the not so distant future. To ensure sufficient retirement funds for the current working generation is one of the most serious ethical, social and political challenges of our time, along with other intractable problems such as global warming. But unlike global warming poverty in the old age is not a natural phenomenon, nor has anything to do with any natural law.
Politically, we face a fundamental maturity mismatch between the short term electoral interests of our politicians and the long term hard choices and reforms that the pensions system requires to be viable again. Financially, it is unattractive to promote a culture of long term saving since the systems of compensation for financial performance are mostly orientated to boost short term sales. Socially, in addition to the fact that we human beings do not tend to save naturally, we face some other worrying cultural trends when we try to do it.
It is impossible to solve the problem of saving for retirement with one single policy; nevertheless we propose a new scheme of saving for retirement which could be one significant step (among many others needed) in the right direction. This is the first theoretical paper to explore the alternative of saving for retirement through consumption and it is just the beginning of the sum of many efforts that when properly connected will help minimize one of the major problems of our times: poverty in old age. This is not exposed as a panacea, but as a complement to other retirement solutions and as a way of constantly reminding people of the need to save for retirement. Examples of implementation in Mexico and Spain are described