Pensions are naturally a pretty big source of anxiety for most of us. The word alone elicits a feeling of squirming worry and provokes unpleasant thoughts about being destitute in our old age or being forced to work until we die.
In fact, pensions are the for a fifth of middle-class Americans. While it would be nice to say that these kinds of worries are unfounded, the opposite is unfortunately the case. There seems to be more reason than ever these days to be concerned, with huge pension deficits across the world.
People are relying on governments and corporations to protect their pensions, but these institutions are really not doing a great job of it.
And as people on average live longer and face decades of retirement, it’s becoming ever more crucial to find a new way of doing pensions — one that puts the individual in the driving seat and moves away from reliance on strained third parties.
Blockchain technology could be a valuable tool in building a more robust pensions infrastructure. To figure out how, let’s first look at the problems facing pensions today.
Are pensions on the verge of collapse?
According to a 2016 report, the have a combined shortfall of $78 trillion in funding public pensions.
Let’s take a moment to highlight just how big that number is. The USA, the largest economy in the world, ever, has a GDP of just under $20 trillion at the last count. Plus, $78 trillion is about 1.8 times more than the combined national debt of those 20 countries.
It’s an enormous, terrifying number. And it’s getting bigger. According to one study, eight of the world’s biggest economies could be facing a . That’s five times the size of the entire global economy today.
It’s clear that governments are failing to meet their obligations. So, the answer lies with the private sector, right? Unfortunately not. Private pensions in the US alone have . Like their government counterparts, they simply don’t have the resources to fulfil their promises.
As people live longer and have fewer children in developed countries, the problem is likely to keep getting worse.
The average maximum life expectancy in countries like the U.S., UK, Germany, and Japan could well for people born in the 21st Century. If retirement ages stay where they are, people could be looking at many decades of reliance on pensions.
It’s a serious problem. According to government projections, the U.S. social security trust fund will without major changes. At this point, the program will only be able to pay 77% of benefits.
It’s the definition of a ticking time bomb
We need to create a system where people have greater control and more trust. And the way to do that could be to decrease reliance on centralized parties and move to a more decentralized system where individual users have more power.
The blockchain solution
Startups like want to use blockchain technology to improve the state of pensions for everyone.
Their platform is built on blockchain which is immutable and famously transparent. This means it’s highly resistant to corruption and provides an airtight way to store users’ data, making it more trustworthy than third party pension providers which are often fending off controversy surrounding corrupt practices.
The focus is on giving users greater control and power, so they aren’t held at the whim of powerful centralized institutions. There’s also a focus on clarity and transparency — providing clearly defined terms and rules so it’s easier for people to understand exactly what they’re getting into, and harder to trick them.
In addition to this, Akropolis provides incentives for reliable and effective performers, and rewards whistleblowers who expose shady practices. It’s all aimed at creating an environment where the individual user is safe and able to manage their pension effectively.
This way, blockchain allows users to rely less on crumbling, outdated pensions infrastructures that are clearly not up to the task. Instead, they can take control of their own pensions, and work within a secure and user-friendly platform that has their best interests in mind.
As pensions become simultaneously more important and less reliable, it’s vital to build new ways of managing them. Blockchain could well be the answer and bring peace of mind to millions of people.
Disclaimer: This is a contributed article and should not be taken as investment advice
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