Lans Bovenberg & Casper van Ewijk

By Lans Bovenberg and Casper van EwijkNovember 2011 (Magazine)

The EU debt crisis is making further private funding of pensions more desirable. More private retirement saving is necessary to maintain income in old age when public pensions are being cut due to the crisis. Indeed, the implicit debt in the extensive pay-as-you-go (PAYG) arrangements are an important reason behind the European debt crisis. The best way to address the crisis is to cut entitlement programmes in the medium to long term, while leaving more fiscal room to cushion the economy today.