Saving govt pensions by encouraging citizens’ savings
All Arab countries, except for three, have deficits in their pension funds exceeding 50%. As for the three countries, two recapitalize its fund early last decade. Likewise, these three countries are not immune from deficits of similar proportions during the next to decades if they end up doing the same thing.
Up until now, there is one thing all Arab countries have in common in addition to the Arabic language, which is their so governments on a pay-as-you-go (PAYG) basis. There is no institutional framework, infrastructure, or regulatory regime for retirement income beyond these funds.
Defined benefit pensions — a guaranteed, “gold-plated” inflation-linked pension for life, based on salary and years wo countries around the world. This trend was accelerated in the last 20 years as the cost of new pension promises has spiralled due to declining investment returns.
Damage already done
In most cases, fixing these funds is a difficult, if not impossible, mission, for the deficit in some countries is almost equal to their national GDP, at a time when oil revenues lost their aura to underwrite government liabilities as in the past. For some countries, we can nearly say that the damage has already been done and cannot be changed.
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