European Countries Lead Pack With $78 Trillion Pension Problem: Citigroup
Twenty of the world’s wealthiest countries are facing a $78 trillion pension loss, Citi said in a report on Wednesday.
The bank found that for 20 countries belonging to the Organization for Economic Co-operation and Development (OECD), the total value of unfunded government pension liabilities, money owed to public sector workers, is $78 trillion. The number is almost double government debts for these same nations of around $44 trillion.
If the liabilities of social security and public sector worker underfunding are added as a form of ‘contingent debt’, total global government debt may be three times as large as people currently think it is. Whatever the calculation used, the numbers are staggering,” the bank said.
“The world faces a retirement crisis,” Citi added. “However, solutions - and opportunities - are available if governments and corporations take steps to begin addressing the issues. These conversations and actions need to happen now.”
Countries in the study include the Canada, Australia and U.S. but it is the European countries facing the biggest challenge, the bank noted. Germany, France, Italy, the U.K., Portugal and Spain have an estimated public debt-to-GDP ratio of over 300 percent.
"Government services, corporate profits, or retirement benefits themselves will have to be reduced to make any part of the system work. This poses an enormous challenge to employers, employees, and policymakers all over the world," the bank said in the report.
Citi listed raising the retirement age for these countries as one of many recommendations to avoid a fiscal disaster.
By Daniela Cambone |
