Developed Countries Are Struggling To Manage Pensions — How Can Blockchain Fix This?

One of the biggest problems facing the developed world in the coming decades is something that a lot of us are still blissfully unaware of.

While we’re all fixated on climate change, income inequality, the economy, and social issues (all serious problems) most of us tend to overlook our pensions infrastructure.

That makes sense, for most working-age people. We often have more than enough on our plates when it comes to managing our money today, let alone in the far-distant future. Retirement, and paying for it, is a bridge that many of us have decided to cross when (or if) we eventually come to it.

But that mindset isn’t the best one. Life expectancy is steadily increasing — pensioners in developed countries are living around a decade longer than in 1960, and our lifespans look set to keep getting longer as time goes on.

This means that many of us will need to seriously think about how we’re going to afford all the extra retirement time that a longer life brings. Do we keep working well into our 60s and 70s to avoid running out of money?

Nobody wants to spend their later years working. But the problem gets even more serious if we take into account that a massive 60% of Americans actually retire earlier than planned, for a combination of reasons including poor health.

This means that our pensions have to be reliable and lucrative enough to support many long years of retirement with minimal financial hardship.

The problem is, neither state nor corporate pensions are up to that task. In fact, they’re something of a ticking time bomb, and throughout the developed world there are huge and growing deficits in pension funding.

Let’s take a look at how we got to this point.

Why pension infrastructures are falling apart

We’re at a point now where governments are simply unable to afford their citizens’ pensions. Research focusing on eight of the world’s most advanced economies shows they have a combined retirement savings gap of around $70 trillion.

That’s terrifying enough, but it’s also believed that number is on track to reach $400 trillion by 2050. This looks set to become an enormous problem for these societies, especially as we live longer and require longer retirements.

The problem isn’t confined to governments, either. In the U.S., only 17% of companies offer their employees pension plans, compared to 62% in 1983, and there’s a $3 trillion shortfall in private pension funding.

Ordinary people are facing tough times if they continue to rely on third parties like employers and governments to manage their pensions. So what’s the solution?

We need to build a better pensions model, one that gives more power to individual people and offers a clearer and more transparent way to manage our retirement funds.

A new system

A pensions system for the future needs to move the power from third parties to individuals. At the same time, though, it has to provide reassurance and be trustworthy — people need to know their pensions are safe and not in the hands of someone who might commit theft or fraud.

Akropolis are looking at blockchain technology as a possible new approach to handling pensions on a wide scale. Their model addresses the above problems, and could be a much better alternative to the current doomed model.

The key lies in the inherent features of blockchain technology. It allows for the building of decentralized systems, which removes the need for unreliable third parties in the pensions infrastructure. On top of this, it’s also transparent, secure, and immutable, so worries about fraud and corruption are dealt with.

In a decentralized pension system, people can work directly and easily with pension providers in a way that gives them more autonomy and control. There’s a focus on clarity, education, and co-operation.

It’s a new and modern system that hopes to eventually replace the outdated model we’re currently burdened with. Blockchain has many possible uses, but applying it to pensions could solve one of the future’s biggest problems and seriously showcase the technology’s value


Jose Felip

Jose Felip

The difficult thing is not to learn, the difficult thing is to know how to teach. Editor and coordinator of the free book "La era de las BLOCK punto COM" CEO of