People often - in France, in particular - contrast the way the pensions systems work in Europe with the system in the United States, the former being labelled broadly "state-run", whereas the latter is based exclusively on capitalization. Yet the reality is far more complex than it appears, as Charles du Granrut argues here: the American system does not rely entirely on capitalization and pension funds; public authorities also play an important role.
Charles du Granrut first outlines the main features of the American pension arrangements (social security, private systems, capitalization...) and how they contribute to the income of retired Americans. He goes on to analyse the main trends highlighted in various recent reports. As he emphasizes, the ageing of the population will undoubtedly have a major impact on the state pension system as the reserves seem to be condemned to run out if the way the system works is not reformed. And the supplementary pension schemes, as they stand, are far from being able to make up for the shortfall in the reserves of the state system, largely because the pension funds have been underfunded and American households save too little.
Like Europe, the United States is therefore at risk of encountering major problems with regard to financing pensions in the coming decades, with potentially serious consequences for intergenerational fairness and for the standard of living of the elderly. But perhaps America will be able to cope more easily, thanks to the flexibility created by the fragmented nature of the system