Abstract
Social security pensions have two major requirements for satisfying the sincere desire of the public. One is financial sustainability, and the other is the adequacy of benefits. As the population aging went on, financial sustainability became more serious in almost all countries. A long list of policy options to ensure financial sustainability has been demonstrated globally. They are usually painstaking with tears and quite unpopular to the public. Nevertheless, many developed countries have already managed to implement these policy measures. The other requirement, adequacy, is desired for the elderly to maintain a decent living standard after retirement. If any pension system fails to meet this requirement, it will be politically unsustainable. Financial sustainability often violates the adequacy requirement. However, both requirements will not always be compatible with each other. Sophisticated balances between them are necessary for pension policymaking. This study first gives an overview of making social security pension systems financially sustainable. Ample experiences in developed countries are illustrated. Before going into discussions, fundamental characteristics of social security pensions and a need for periodic actuarial evaluations are mentioned. Then, it demonstrates the basic contents of pension adequacy from an economic perspective, explaining various relationships to poverty alleviation.
This chapter is a development of Takayama (2021) (Chapters 1 and 2 in Pension reform: Global solutions and Japanese experiences. Research Institute for Policies on Pension & Aging [RIPPA]). The present author is deeply indebted to the valuable comments and helpful advice from Dr. Xinmei Wang and Mr. Susumu Yamamoto. The author is very grateful for research grants from the JSPS KAKENHI (Grant number: 19H01496). Special thanks are due to Ms. Akiko Tomioka for her excellent secretarial work in preparing this manuscript.
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Takayama, N. (2023). Financial Sustainability and Adequacy Issues on Social Security Pensions. In: Ma, X. (eds) Public Pension Reforms in China. Springer, Singapore. https://doi.org/10.1007/978-981-19-9997-0_6
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DOI: https://doi.org/10.1007/978-981-19-9997-0_6
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