Piggott and Libich on pension reform

With people living longer and with societies becoming more forward-looking as to how to handle the long post-retirement years, the issue of optimal pension systems is big in Australia and elsewhere. Have a look at this excellent interview between John Piggott and Jan Libich where the issue of what the optimal system would look like is very knowledgeably debated.



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6 Responses to Piggott and Libich on pension reform

  1. Catching up says:

    The clue is living longer. Not living sicker longer., Yes, one is very healthy and lively at 90 today.

  2. Jeremy says:

    I have just finished listening to this excellent interview. It is logical and academic but it does not take into account the whims of government and the risks, associated with government be they to the left or right, can be extreme.

    Example: the rules associated with our superannuation system are changed on an annual basis. There is no certainty that a contributor will receive anything, in say 30 years time, as the rules may be changed where the government appropriates the cash and re- distributes it.

    • paul frijters says:

      yes, the issue of long-term credibility is clearly very important in this one. It is raised in the interview as the implicit broken promises in Southern Europe after the GFC and the inability of governments in developing countries to commit to longer term plans are touched upon. His final remark on sound government is very much about this.

      So I would say its a case of core promises versus short-term smaller variations. Governments will always have to make decisions that are not quite what previous governments had in mind, nor would one want a situation whereby future governments can be bound completely by anything we decide now for that would be slavery. But one can have a consensus on what is responsible and efficient in this realm, so that later changes are believable within a bound.

      • conrad says:

        I agree, it was a great interview.

        The problem with the bound is that with things like super, that might be decades away and things can and do change substantially within 40 years. Can people really trust the government over that time on things like not pushing back when they will be able to get super, or not adding additional taxes? I somehow doubt it for many people, even in historically pretty stable countries like Aus. This is particularly so because, even though as the video points out, the costs of aging really arn’t that bad, no-one is going to want to pay for them anyway.

        Try talking to your relatively well educated and well reasoned students about this. I’ll bet many of them think it won’t be the case what’s around today will be around tomorrow, so it’s easy to see why many wouldn’t want to pay tax for such things, especially once we try and make them pay for everything else (within their imaginations).

  3. hc says:

    Very informative interview. Well done Jan and John.

  4. Catching up says:

    Labor said that Abbott would have to cut/slash everything in sight, as well as raising taxes and charges to achieve his aims. Abbott accused Labor of lying and of scare tactics, Labor said it would be those at the bottom that would pay the price. Once again, spot on.

    Trouble is, Labor was 100% spot on.

    Everything that Abbott knows now, was pout in the open before the election., There were n surprises, not even Abbott’s behaviour.

    Maybe one could interchange the word shock, for surprise.

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