The New Social Contract: Age-Friendly Employers
Long before the COVID-19 pandemic, retirement systems around the world had been undergoing severe financial strain as a result of increases in longevity, population aging, and the prolonged, low interest-rate environment. Government benefits, such as social security, have been facing severe funding shortages and reforms are imminently needed. Traditional pension plans offered by employers have been replaced with employee-funded defined contribution plans which may or may not have employer contribution. As a result, individuals have become increasingly expected to self-fund a greater portion of their retirement income, but relatively few are equipped to do so. Consequently, the long-standing social contract has been crumbling.
In 2018, Transamerica Center for Retirement Studies in collaboration with Instituto de Longevidade MAG and Aegon set forth a call to action in the report, The New Social Contract: A Blueprint for Retirement in the 21st Century, which is based on solidarity and the premise that all individuals should have the ability to retire with dignity. It calls for a collaboration among policymakers, industry, employers, nonprofits, and academics to modernize retirement systems in a way that is sustainable and adaptable for the future. It comprises nine essential design features ranging from ensuring the sustainability of social security benefits to lifelong learning, longer working lives, and flexible retirement.
Amid the pandemic, countries are navigating the greatest public health crisis in more than a century, a crisis that has brought about a major economic downturn, steep declines in financial markets, business closures, and widespread unemployment. Now, more than ever before, a new social contract for retirement is urgently needed.
The New Social Contract: Age-Friendly Employers, a follow-up report published in 2020 explores the evolving nature of the employer-employee relationship and it examines the vital role of employers in helping their employees achieve a financially secure retirement. It delves into topics on the offering of employee benefits including retirement benefits, creating an age-friendly culture in which employees of all ages have the ability to succeed, and promoting health and wellness in the workplace.