Pensions policy has been the most talked-about of all social policies in the late 20th and early 21st centuries. To be now discussing the subject in relation to Barbados is like going back in time, but it is a necessary discussion to have, given the reluctance of decision-makers to even learn the basics of the subject. But before doing so, a brief history: state pensions as the term is now understood in policy discussions go back to 1898, when Bismarck introduced the benefit in Germany, with a state retirement age of 65. However, in those days, longevity was about 45, so it was unlikely that most working Germans would reach retirement age, and if they did, live very much longer. But, post war, due to improvements in medical science, nutrition, and a reduction in hard, physical work, global longevity has now expanded by leaps and bounds with people in developed countries now living in to their 80s and 90s. What this means in real terms, is, for example, someone coming out of university at the age of 23, working for 42 years and retiring at the age of 65, has on average 15 or more years to live. With a growing population, there were on average about four to five workers for every retired person at the turn of the last century, making the pay-as-you-go system viable. However, combined with the demographic time bomb, in which there are now about two workers to every pensioner (Japan at present, China by 2030, and most developed nations, with the exception of the US, by 2020), this is no longer viable.
In 1981, under the brutal General Pinochet, the Chilean military government embarked on one of the most progressive reviews of state pensions in the world. This was followed by most democratic countries, leading to a series of state-backed pensions, geared to meet this challenge. In New Zealand we got the KiwiSaver, in Australia compulsory superannuation, in the US 401(Ks), in Britain National Employment Savings Trust (which is semi-compulsory), and many more.