Defining the Blueprint: Now is the Time to Forge a New Social Contract for Retirement

This article is part of the Forum Network series on New Societal Contract and will feed into upcoming discussions at OECD Forum 2019.

In my role as CEO of Aegon, I am often confronted with heartbreaking stories about people who are inadequately prepared for retirement. Many of these stories are about people who were caught off guard by life’s unforeseen circumstances and expectations of social safety nets that no longer exist. Such stories reinforce my belief in Aegon’s purpose: helping people achieve a lifetime of financial security.

In countries around the world, the long-standing social contract for retirement has crumbled. Governments are struggling with how to ensure the sustainability of social security systems. Amid funding issues, the defined benefit pension plans, traditionally offered by employers, have been replaced by defined contribution that are funded by employees, often with contributions from employers. Defined contribution plans shift responsibility for saving enough for retirement, and subsequently converting savings into a lifetime income, to the individual. Many people are inadequately equipped to take on this change in responsibility and are at risk of not achieving a financially secure retirement. Only 25% of workers globally feel they are on track to achieve their estimated retirement income needs, according to findings from Aegon’s 2018 survey spanning 15 countries.

At Aegon, we believe that the lessons from the current social contract for retirement can be applied to forge a new social contract that is sustainable, resilient and adaptable to our changing times. Our study The New Social Contract – a blueprint for retirement in the 21st century creates a call to action to not only analyse the situation surrounding retirement as it is today, but also to take a strong look at the social realities of the future.

With the fast pace of change, today’s workers are encountering different employment trends and will experience retirement realities quite different from those of their parents’ generations. The long-standing social contract has become outdated and is no longer tenable. It is now imperative that we re-evaluate retirement altogether.

Through a collaboration among stakeholders including governments, industry, employers, nonprofits, academia and community groups, Aegon believes there are four main principles that are integral to a new social contract:

  • Universal access to retirement savings plans so that all individuals have the opportunity to save.  Such arrangements should encompass vulnerable groups such as the self-employed or those who work intermittently to care for others. As people take an increasingly more flexible approach to their working lives, their retirement savings options should be flexible, too.
  • Working lives must be approached in a different way since retiring at 65 is no longer financially viable for many workers or societies. Ways in which workers can work longer must be explored and adapted, as well as tackling the issue of age discrimination in the workplace. A more flexible approach to retirement is required so that people can gradually transition by reducing their hours and/or working in a different capacity. Traditional career paths where individuals take on more responsibility and then suddenly fully retire no longer mirror the needs of either societies or individuals.
  • Sound health is essential for helping ensure people can work and enjoy life longer and must be promoted by all stakeholders. This, in turn, can benefit society as it will place less burden on healthcare systems. Governments, NGOs, industry, employers, healthcare providers and individuals themselves all have a responsibility in promoting healthier lifestyles. In addition, the correlation between health and wealth is undeniable. It is essential that people protect and maintain their physical health as much as their financial health.
  • Financial literacy must be taught continuously across life stages so that people can make informed decisions about their finances and plan adequately for retirement. Simply telling the general public is not enough. A sustained and collaborative effort on the part of educational institutions, governments, employers and companies in the private sector is required to educate people about what financial options for retirement are most beneficial to them.

Helping people build wealth and maintain good health are long-term commitments that none of us can ignore. If all of the stakeholders step up and work together, an age-inclusive society with sustainable retirement options can be within our reach. The time to act is now. If we can forge a new social contract as soon as possible, the current and future generations will benefit. At Aegon, we are fully committed to contributing to this effort and effecting positive change. We invite you to join us.

We are ready and willing for discussions on this topic. More importantly, we invite input and buy-in from stakeholders so we can make sure financial security is achievable for everyone. Questions that are on our mind include:

  • How can we create a more age-friendly world?
  • What needs to change so that people can transition to retirement at a time that is right for them?
  • What can we do as individuals to maintain our good health?

Source: OECD Forum Network

Latest Developments

We keep our members and partners in touch with the most recent updates and opinions in the worldwide dialogue on population longevity and related issues.

New Index Ranking 11 Countries’ Ability to Tackle Rising Threat of Resistance to Antimicrobials Shows Need for Urgent Action

New York, NEW YORK and Washington, DC (June 23, 2021) – Today the Global Coalition on Aging (GCOA) and the Infectious Diseases Society of America (IDSA) launched the first-ever global AMR Preparedness Index, a first-of-its-kind evaluation of how the governments of the 11 largest global economies are living up to their commitments to address antimicrobial resistance (AMR).

Global Alliance on Heart Failure & Healthy Aging Unveils New Report Projecting Sharp Rise in Heart Failure Mortality Linked to Population Aging and Missed or Late Diagnosis

New York, NY – June 10, 2021 – Today, the Global Alliance on Heart Failure and Healthy Aging unveiled a new report, Undiagnosed Heart Failure: A Growing Public Health Risk and Looming Financial Iceberg for Aging Societies. The report examines the link between aging and heart failure, recognizing that a significant portion of heart failure deaths occurs in the older population.

Ageism: how age discrimination can be fought in society and the workplace – but older people have to stop believing the stereotypes first

Ageism is something that’s likely to affect everybody as they grow older and it should be treated as seriously as other “isms”, such as racism and sexism. That was the main takeaway from a recent “Solutions to Combat Ageism” webinar, organised in New York by the Global Coalition on Ageing, which aims to educate and drive change to improve older people’s health, productivity and social engagement.

NEW REPORT – Policy Priorities for Super-Ageing Japan: Health Innovation and Economic Growth in the COVID-19 Pandemic Era

New York and Tokyo (February 24, 2021) – Today, the Global Coalition on Aging (GCOA) and the Health and Global Policy Institute (HGPI) announced a report sharing key takeaways from their roundtable on healthy aging, innovation, and the silver economy. The October 2020 virtual roundtable convened experts from across the health, business, aging, and elder homecare sectors in a policy discussion to call on governments to recognize health spending as a critical investment for countries like Japan, who are leading the global megatrend of aging and placing innovation at the center of this investment.

Global Coalition on Aging Partners with the World Summit on the Information Society (WSIS) Forum 2021

New York, NEW YORK (February 23, 2021) – The World Summit on the Information Society (WSIS) Forum 2021 and the Global Coalition on Aging (GCOA) announce their collaboration on the first-ever WSIS Forum Healthy Ageing Innovation Prize to be awarded  at the WSIS Forum 2021.  The prize will be awarded to the most innovative technology that enables healthier and more active ageing and will be presented in parallel with the WSIS Forum 2021 Special Track on ICTs and Older Persons, which is designed, organized and supported by GCOA.

NEW REPORT – The Threat of AMR to Japan’s Super-Aging Society: Implications on Health Care, Public Policy, and Economic Well-Being

New York and Tokyo (February 21, 2021) – Today, the Global Coalition on Aging (GCOA) and the Health and Global Policy Institute (HGPI) announced a report sharing key policy-focused takeaways from their roundtable on antimicrobial resistance (AMR) in super-aging Japan. On October 7, 2020, the roundtable convened experts from across the business, government, academic, aging, and non-profit sectors in a policy discussion that recognized the multifaceted risks of AMR in aging societies around the world, including super-aging Japan.

WSIS Forum 2021 and the Global Coalition on Aging Partner on Hackathon to Inspire Cutting-Edge ICT Innovation for Older Persons

New York, NEW YORK (February 18, 2021) – The World Summit on the Information Society (WSIS) and the Global Coalition on Aging (GCOA) today announce their partnership on the Ageing Better Through ICTs hackathon, a first-of-its-kind global hackathon focused on innovation for the Silver Economy. The hackathon, conducted virtually, will draw participants from around the world and of all ages to generate ideas for information and communication technologies (ICTs) to improve the lives of older persons.

​​​​Global Coalition on Aging and Pfizer Medical Grants Partner to Tackle Vaccine Hesitancy in Super-Aging Japan

New York, NEW YORK (February 17, 2021) – The Global Coalition on Aging and Pfizer Global Medical Grants announced today the launch of the first of its grant projects under the Japan-focused VALUE Initiative (Vaccines for All: Longevity Unleashed for Everyone), which has provided up to $1 million USD in grant awards. Grant recipients include Keio University, the Health and Global Policy Institute (HGPI), and the International Longevity Centre-UK.

Cross-Sector Panel of Experts Offers Trusted Guidance and Answers New Yorkers’ Questions on the Importance of Older Adult New Yorkers Getting Vaccinated Against Covid-19

New York, NEW YORK (January 21, 2021) – The New York City Department for the Aging, the Age-friendly NYC Commission, and the Global Coalition on Aging (GCOA), the world's leading business voice on aging, collaborated yesterday on a webinar to help build trust and acceptance of the Covid-19 vaccines for New York’s older adults.