Reform. Inform. Educate.A New Paradigm to Improve Fairness andSustainability of the European Welfare SystemElsa ForneroUniversity of Turin

April 2016

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The population pyramid - Italy- 1971

meno di 55 a 9

10 a 1415 a 1920 a 2425 a 2930 a 3435 a 3940 a 4445 a 4950 a 5455 a 5960 a 6465 a 6970 a 7475 a 7980 a 8485 a 8990 a 94

95 a 100100 e +

3000 2000 1000 0 1000 2000 3000

Men

Women

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The population pyramid - 2011

meno di 55 a 9

10 a 1415 a 1920 a 2425 a 2930 a 3435 a 3940 a 4445 a 4950 a 5455 a 5960 a 6465 a 6970 a 7475 a 7980 a 8485 a 8990 a 94

95 a 100100 e +

3000 2000 1000 0 1000 2000 3000

Men

Women

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The population pyramid - 2061

meno di 55 a 9

10 a 1415 a 1920 a 2425 a 2930 a 3435 a 3940 a 4445 a 4950 a 5455 a 5960 a 6465 a 6970 a 7475 a 7980 a 8485 a 8990 a 94

95 a 100100 e +

3000 2000 1000 0 1000 2000 3000

Men

Women

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1971 2011 2061

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How to redress the intergenerational compact

• reduce the burden on young/future cohorts

• improve the mix between social insurance and social protection

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Saving the European Welfare System

Sustainability

Reforms

Improve the synergies btw. adequacy and sustainabilityA

dequacy

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The new paradigmReform Inform Educate

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1. Reform• Towards a social insurance • Uniform and transparent rules • Inclusive labor market• State/market complementarity

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The golden rules of pensions• Responsibility: pension financed through saving

• Flexibility: benefits linked to the age of exit; possibility of choice btw. constant and increasing pension; Gradual retirement

• Sustainability: age linked to life expectancy• Adequacy: integration with supplementary

pensions and LTC services• Solidarity instead of privileges

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2. InformThe example of the orange envelopeSimple but accurate information to ensure:

- good planning of retirement savings over the life cycle

- a proper assessment of the possible choices (eg . pension fund, retirement age)

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3. Educate• A higher responsibility requires a minimum

of knowledge

• Economic and financial education is essential for:

- A prudent accumulation/management of savings (women more at risk)

- A higher effectiveness of the reforms (citizenship)

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“It's easy, impossible, tough going, worth a shot”

(Wislawa Szymborska, "Poems, New and Collected, 1957-1997", Houghton Mifflin Harcourt, Boston, 2000.)