In much of the discussion about aging populations to date, the problem has been framed as being about retirement systems and the relative merits of one type of retirement system or the other. Policy analysts have focused mostly on whether our retirement systems should be funded or financed on a pay-go basis, or whether they should be run through the central government or “privatized” to some extent. Deciding whether a retirement system should be operated on a funded or pay-go basis depends on a variety of economic and demographic factors as we explored in Chapter 3.

In comparing the retirement systems from around the world today, especially the developed countries, it becomes very clear that although there are many similarities among systems, there are remarkable variations in how different countries provide income security for the elderly. It is important to understand these similarities and differences in order to appreciate why some countries seem to be better positioned to deal with their aging populations than others.

Contemporary Approaches to Providing Income Security for the Elderly

To some extent, the plans established in the early days of the social insurance movement in the late eighteenth and early nineteenth century are still operating today. But dynamic political and social environments have led to many changes in their structures. Around the world today, the government pillar tends to be made up of one or two tiers.