It’s the Years, Not The Mileage: IMF Analysis of Pension Reforms in Advanced Economies


By Benedict Clements

Indiana Jones, the fictional character of the namesake movies, once said “It’s not the years, it’s the mileage.” This quote comes to mind as many advanced economies wrestle with pension reform and the best way to ensure both retirees and governments don’t go broke.

Our view, explained in a new study, is that the years do matter.

Our analysis shows that gradually raising retirement ages could help countries contain increases in pension spending and boost economic growth. Further cuts in pension benefits, or raising payroll contributions, are also options countries could consider, although many countries will find many advantages in raising retirement ages.

The challenge is to reform pension systems without hurting their ability to provide income security for the elderly and prevent old-age poverty. Continue reading

The Health Care Challenge: Not Just a U.S. Problem


By Carlo Cottarelli

Health spending in OECD countries increased from 4½ percent of GDP in 1960 to 12½ percent in 2007 (see Figure 1 below). What accounts for this dramatic increase? Income growth, insurance, demographics, and technological change all contributed, but the latter was the key driver. Public spending for health care also increased sharply (by 5½ percentage points of GDP) during this period (see Figure 2).

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