Governments Have It Wrong on Pensions—Personal Lessons from a Consulting Career

Abstract

Governments cannot persuade or force citizens to save more for retirement than they want to save. They should instead focus on doing things that only governments can do. In this article, the author builds the case for a strong role for governments in retirement planning, including assertions that: Only governments can reliably eliminate or reduce poverty in retirement through a livable, universal state pension. Only governments can (and should) level the tax and regulatory playing fields for all financial services. Only governments can obtain high-quality data so that we understand what households are doing, financially and otherwise, about their retirement incomes. Finally, only governments can deliver believable information that helps citizens to understand their retirement saving needs. Both governments and employers should stay away from subsidized or forced saving schemes. There is no international evidence that they work.