Twenty countries of the Organization for Economic Cooperation and Development have promised their retirees a total $78 trillion, much of it unfunded, according to the Citigroup report.
That is close to twice the $44 trillion total national debt of those 20 countries, and the pension obligations are “not on government balance sheets,” Citigroup said.
“Total global government debt may be three times as large as people currently think it is,” the researchers warned, after gathering as much information as they could about various government pension plans and adjusting the amounts where necessary, to permit fair comparisons with bond debt.
The report singled out Germany, France, Italy, the UK, Portugal and Spain for having public sector pension liabilities in excess of 300 percent of GDP, while noting that corporate pensions in the United States and the UK are not in particularly good health either.
It’s an unpleasant reality that’s dawning on the Western world: the comfortable 20th century welfare state only appeared sustainable while the baby boomers were in the active workforce. As that venerable cohort ages (and reaps the considerable benefits provided by advances in medicine to live into a ripe old age), the demographics have shifted, and the underlying numbers just don’t add up any more: there are fewer and fewer working people available to support an aging population.
The adjustments the world over are going to be painful and ugly, when people at the end of their working lives realize that the comfortable retirement they were counting on is anything but assured.