This aggravation coincided with the period when a new and quite voluminous wave of pensioners started entering the world pension systems, thereby requiring substantial financial resources to be ensured with pensions. In this regard, the year 2011 is considered to be a sort of watershed. It is precisely beginning in this year that the first wave of the so called baby boom generation started retiring.
The birth rate reached its peak over the period between 1940s and 1960s. Therefore, this wave of new pensioners is the largest in the history by its scale and at the same time, the most influential (as a rule, pensioners are considered one of the most consistent and active voters and consequently, to win their hearts, governments often take such decisions which bring short term political benefits but are economically unsubstantiated).
As a result, state budgets of almost every developed country are characterized with huge deficit. According to the data of the European Union,2 as of 2013, the majority of the EU member states fail to observe the “debt ceiling” parameter established by the Maastricht Treaty (under this treaty, a state debt shall not exceed 60% of a country’s Gross Domestic Product). In reality, the amount of debt against the GDP comprises 92,2% within the Eurozone.
In contrast to the widespread opinion, this problem is not caused by global or local financial and economic crises alone. According to estimated of the International Monetary Fund (IMF), only 20% of expected increase in domestic state debts in the nearest future will account for financial crisis and recession. The remaining 80% will be accounted for the increase in public funds for covering health care, social and especially, pension liabilities.
For this very reason, when evaluating the existing situation, international scientific sources increasingly use the term “gerontocracy” which reflects the growing influence of elderly on politics.3
In such a situation, pension systems face a number of challenges. These challenges are diverse and quite multifaceted, but they still can be grouped following certain logic.