The New Social Contract: Empowering Individuals in a Transitioning World
Social contracts among governments, employers, and individuals are central to retirement systems around the world. However, the social contracts forged during the 20th century are crumbling under the pressures of aging populations and rapid social and economic changes. Generous social security benefits and traditional defined benefit pension plans are diminishing, as life expectancies and the need for self-funded retirement savings are increasing.
Today’s generation of workers anticipates long retirements that include a period to be characterized by physical and/or cognitive decline, anticipating a difference between life expectancy (the age at which people die) and healthy life expectancy (the age at which people’s health starts to decline). These factors are forcing everyone, as individuals and social partners, to reevaluate their plans for achieving good health and financial prosperity in later life. From a societal perspective, we must adapt the new mantra “build your wealth and protect your health” when planning for retirement.
The New Social Contract: Empowering individuals in a transitioning world is a research report based on findings from a 2019 global retirement survey and is the result of a collaboration between nonprofit organizations Transamerica Center for Retirement Studies® (based in the US) and Instituto de Longevidade Mongeral Aegon (based in Brazil) and Aegon (based in the Netherlands).
In 2018, the three organizations proposed a New Social Contract for Retirement: a blueprint for retirement in the 21st century that calls for a modernization of retirement systems around the world. The new social contract should be flexible and adaptable, but sustainable and resilient to ever-changing times. It should harness innovations based on behavioral economics, healthy aging, and other enhancers of retirement security – while applying lessons of experience.
The New Social Contract: Empowering individuals in a transitioning world is a follow-up report that furthers this call to action. With a focus on empowering individuals to take greater action and more responsibility, this report seeks to expand financial planning into more holistic retirement plans that contemplate work, health, active lifestyles, lifelong learning, communities, and the ability to age in place. This report provides detailed perspectives and offers recommendations on the evolving roles of governments, employers, and individuals as social partners. It emphasizes helping people live long, healthy lives and achieve long-term financial security.
The findings in this report are based on 14,400 workers and 1,600 retired people surveyed across 15 countries including Australia, Brazil, Canada, China, France, Germany, Hungary, India, Japan, the Netherlands, Poland, Spain, Turkey, the United Kingdom, and the United States. The survey was conducted online between 22nd January and 14th February 2019.