COVID and Pension Planning Worldwide 3

 In an interesting article in the Asia Pacific Forum, Odusote Fatimah Abolanle and Alfred Muluan Wu write.

Many governments have also introduced subsidized pensions for a specific group of workers who registered under the pension scheme. In India, the central government was willing to contribute 24 percent of the salary of employees working in firms with up to 100 workers for three months.

 COVID-19 has laid bare the persistent gap in pension coverage, especially in low and middle-income countries where the working population is mainly in the informal sector. There is a clear need to create a non-contributory system in such a climate, or at least to extend its coverage to cater for those in the self-employed or informal sectors, to improve social protection and prepare workers for retirement.

 The hard truth is social security pension systems are still mainly the business of government, requiring strict monitoring, regulation, and support by the state, especially in developing countries. While COVID-19 has spurred several countries to make temporary adjustments to pension schemes, in the post-COVID-19 era all governments will have to conduct a thorough review of their pension systems to fix the endemic problems that exist.

 In doing so, policymakers will have to answer a number of critical questions. In addition to benefiting from public-private partnerships, the role of the state in providing pensions should be rethought. Policymakers should resist popular discomfort with increasing spending on retirement income protection, and acknowledge its many benefits for society and the economy.

 While much is up in the air for pension policy, one thing is certain. In the wake of COVID-19’s economic shockwaves, the adequacy and sustainability of pension schemes must be protected and extended, and policymakers must do everything they can to make that happen.