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The Pension Time Bomb: $400 Trillion by 2050

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The Pension Time Bomb: $400 Trillion by 2050

The Pension Time Bomb: $400 Trillion by 2050

View the high resolution version of today’s graphic by clicking here.

Are governments making promises about pensions that they might not be able to keep?

According to an analysis by the World Economic Forum (WEF), there was a combined retirement savings gap in excess of $70 trillion in 2015, spread between eight major economies..

The WEF says the deficit is growing by $28 billion every 24 hours – and if nothing is done to slow the growth rate, the deficit will reach $400 trillion by 2050, or about five times the size of the global economy today.

The group of economies studied: Canada, Australia, Netherlands, Japan, India, China, the United Kingdom, and the United States.

Mind the Gap

Today’s infographic comes to us from Raconteur, and it illuminates a growing problem attached to an aging population (and those that will be supporting it).

Since social security programs were initially developed, the circumstances around work and retirement have shifted considerably. Life expectancy has risen by three years per decade since the 1940s, and older people are having increasingly long life spans. With the retirement age hardly changing in most economies, this longevity means that people are spending longer not working without the savings to justify it.

This problem is amplified by the size of generations and fertility rates. The population of retirees globally is expected to grow from 1.5 billion to 2.1 billion between 2017-2050, while the number of workers for each retiree is expected to halve from eight to four over the same timeframe.

The WEF has made clear that the situation is not trivial, likening the scenario to “financial climate change”:

The anticipated increase in longevity and resulting ageing populations is the financial equivalent of climate change

Michael Drexler, Head of Financial and Infrastructure Systems, WEF

Like climate change, some of the early signs of this retirement savings gap can be “sandbagged” for the time being – but if not handled properly in the medium and long term, the adverse effects could be overwhelming.

Future Proofing

While implementing various system reforms like raising the retirement age will help, ultimately the money in the system has to come from somewhere. Social security programs will need to cut benefits, increase taxes, or borrow from somewhere else in the government’s budget to make up for the coming shortfalls.

In the United States specifically, it is expected that the Social Security trust fund will run out by 2034. At that point, there will only be enough revenue coming in to pay out approximately 77% of benefits.

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Countries

Charted: The Number of Democracies Globally

How many democracies does the world have? This visual shows the change since 1945 and the top nations becoming more (and less) democratic.

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Charted: The Number of Democracies Globally

The end of World War II in 1945 was a turning point for democracies around the world.

Before this critical turning point in geopolitics, democracies made up only a small number of the world’s countries, both legally and in practice. However, over the course of the next six decades, the number of democratic nations would more than quadruple.

Interestingly, studies have found that this trend has recently reversed as of the 2010s, with democracies and non-democracies now in a deadlock.

In this visualization, Staffan Landin uses data from V-DEM’s Electoral Democratic Index (EDI) to highlight the changing face of global politics over the past two decades and the nations that contributed the most to this change.

The Methodology

V-DEM’s EDI attempts to measure democratic development in a comprehensive way, through the contributions of 3,700 experts from countries around the world.

Instead of relying on each nation’s legally recognized system of government, the EDI analyzes the level of electoral democracy in countries on a range of indicators, including:

  • Free and fair elections
  • Rule of law
  • Alternative sources of information and association
  • Freedom of expression

Countries are assigned a score on a scale from 0 to 1, with higher scores indicating a higher level of democracy. Each is also categorized into four types of functional government, from liberal and electoral democracies to electoral and closed autocracies.

Which Countries Have Declined the Most?

The EDI found that numerous countries around the world saw declines in democracy over the past two decades. Here are the 10 countries that saw the steepest decline in EDI score since 2010:

CountryDemocracy Index (2010)Democracy Index (2022)Points Lost
🇭🇺 Hungary0.800.46-34
🇵🇱 Poland0.890.59-30
🇷🇸 Serbia0.610.34-27
🇹🇷 Türkiye0.550.28-27
🇮🇳 India0.710.44-27
🇲🇱 Mali0.510.25-26
🇹🇭 Thailand0.440.20-24
🇦🇫 Afghanistan0.380.16-22
🇧🇷 Brazil0.880.66-22
🇧🇯 Benin0.640.42-22

Central and Eastern Europe was home to three of the countries seeing the largest declines in democracy. Hungary, Poland, and Serbia lead the table, with Hungary and Serbia in particular dropping below scores of 0.5.

Some of the world’s largest countries by population also decreased significantly, including India and Brazil. Across most of the top 10, the “freedom of expression” indicator was hit particularly hard, with notable increases in media censorship to be found in Afghanistan and Brazil.

Countries Becoming More Democratic

Here are the 10 countries that saw the largest increase in EDI score since 2010:

CountryDemocracy Index (2010)Democracy Index (2022)Points Gained
🇦🇲 Armenia0.340.74+40
🇫🇯 Fiji0.140.40+26
🇬🇲 The Gambia0.250.50+25
🇸🇨 Seychelles0.450.67+22
🇲🇬 Madagascar0.280.48+20
🇹🇳 Tunisia0.400.56+16
🇱🇰 Sri Lanka0.420.57+15
🇬🇼 Guinea-Bissau0.410.56+15
🇲🇩 Moldova0.590.74+15
🇳🇵 Nepal0.460.59+13

Armenia, Fiji, and Seychelles saw significant improvement in the autonomy of their electoral management bodies in the last 10 years. Partially as a result, both Armenia and Seychelles have seen their scores rise above 0.5.

The Gambia also saw great improvement across many election indicators, including the quality of voter registries, vote buying, and election violence. It was one of five African countries to make the top 10 most improved democracies.

With the total number of democracies and non-democracies almost tied over the past four years, it is hard to predict the political atmosphere in the future.

Want to know more about democracy in today’s world? Check out our global breakdown of each country’s democratic score in Mapped: The State of Global Democracy in 2022.
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