Abstract
Over the past decade, many governments have been attempting to reduce current and future planned expenditure on social security. In justifying these reductions, great stress has been laid on the projections of increasing dependency ratios that will result from population aging, especially as the post-war ‘baby boom’ generation reaches retirement age in the early part of the next century. Indeed, some commentators have referred to a ‘world crisis in social security’ [Rosa (1982)]. It seems as if those demographers who have not been fully occupied in arguing that rapid population growth constitutes a major threat in one part of the world are warning that fertility decline constitutes a serious issue for the rest. Admittedly, the expenditure projections look serious. In the United States, the Medicare fund is expected to go into deficit in the 1990s and remain in deficit thereafter, while projections by the fund’s trustees suggest that Old Age Survival and Disability Insurance (OASDI) benefits will exceed the revenues from the scheduled OASDI payroll tax rate of 12.4% in every year after 2015 (Levy, 1984). In the United Kingdom, expenditure on state pensions was expected to rise from f 15.4 billion in 1984-85 to between f36 and f50 billion in 2023-24 at 1984-85 prices (the range depending on the type of indexation; HMSO, 1985a; see also Hemming and Kay, 1982). This growth will however be reduced by recent legislation designed to reduce replacement ratios in the state scheme and to encourage private rather than public pension provision (Creedy and Disney, 1988a). Other countries also face substantial rises in real pension expenditure between 1980 and 2025: in
Published Version
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