Real Talk: Can crypto feed me when I'm old?
By Olya Green
In the wake of this past week’s news about pension funds making their first foray into the realm of digital assets, I took a minute to explore the recent developments in the landscape of government-supported pensions to figure out why providing social security has been largely abandoned by those who once undertook to protect the retirees.
Starting off with the countries that could never really boast sound dedication to funding of the social realm, let’s take a look at some recent developments in the Russian Federation. Back in December 2018, the government did something pretty outrageous, especially for those elderly who remember the heyday of the Soviet times. Suggesting that the citizens were better off making retirement saving plans on their own instead of hoping to be granted pensions by the Government, it was highlighted that the Russian pensions system wouldn’t suffice to provide for some basic life necessities of the retirees. This announcement, however, doesn’t come particularly surprising in the light of the country’s latest federal law that stipulates the raise of the retirement age.
Well, it looks like raising the retirement age appears to be the preferred, if not the easiest, blueprint for those seeking to leave the elderly off boat. On a global scale, it appears that if one’s life expectancy is fluctuating at 100, the retirement age of 70 is becoming the new normal, mainly due to the rapid increase in pension gap that is expected to reach $224 trillion by 2050:
And it’s not the deceased economies solely adopting the ‘first come, first served’ approach to pensions. The US Congress also implied bailing out hundreds of pension plans by forming a committee that is tasked with using federal funds to terminate a number of ‘multiemployer’ pension plans where employers and labor unions jointly provide retirement benefits to employees. What this essentially means is the US pension system has gotten to the point where the Government is officially getting ready for its failure, while prompting the US citizens to consider an alternate retirement plan.
Turn to the other side of the pond - the UK - and it gets even more hectic. Pensions has been a matter of hot debate here with the retirement savings gap amounting to £2.3trn mainly due to automation of jobs, and overall estimation of falling into the major economic crisis as soon as by 2028. The Government has been making multiple attempts to fix the faulty system by adjusting the budget allocation and creating an online dashboard to help beneficiaries to keep track of pensions. The latter, however, doesn’t seem to be happening any time soon, since the welfare secretary has recently moved to kill the project - her reasoning being mainly that this type of service should not be provided by the state. More so, the UK 2018 Budget specifically states that the UK pension system will be keeping pace with increasing life expectancy. According to the document, "Valuations of public service pensions are ongoing, and provisional results indicate that changes will need to be made from 2019-20 to make pension benefits more generous for public servants, including teachers, police, armed forces and NHS staff’. Does this mean that the Government is intentionally putting off the solution to the coming pensions crisis? Or merely doesn’t have one?
With all those alarming implications at hand, a question arises - were the governments really not competent or aware that social security programs needed reform since the late 80s? Is there a logical reasoning or any legit explanation for the pensions snowball that was never really stopped rolling all this time? How about we consider the incentives of the lobbyists and politicians when coming up with retirement plans underfunded by design? Was this some sophisticated way to keep the taxes low in election promises? And most importantly - could tokenization of assets and putting pensions on the blockchain be a way to track retirees’ funds? Whatever the answers are, one thing is clear: it is essential that savers and investors begin to take responsibility for their retirement plans thinking of some alternate savings path.