I have had several conversations with friends in Buenos Aires about how people deal with their financial security in their older years. To my surprise, the uniform answer is that they mostly don't. Then I hear a story which, by my naïve North American standards is shocking, but which reveals something important for all of us as we contemplate our own future and worry about the uncertainties in the financial markets.
The story goes like this. Prior to 1994, all pensions in Argentina were managed by the government. People would put 15% of their income into the 'fund' and the way things were managed, they would receive a very low stipend of a couple of hundred dollars a month. Basically, the policy and programs created a virtual certainty that getting old was a sentence to living in poverty unless an individual had family to care for them. In 1994, the national strategy shifted the strategy to the private sector and tax-free incentives similar to our 401K accounts. People had some say about where they put their money. In 2004, the laws were amended again to a system of both public and private pension programs and people were given a one-time option to choose between them.
In 2008, according to everyone I spoke to, the current government has 'reappropriated' roughly $30 billion in private pensions. The persons I have been speaking to are not shy about accusing the government of 'stealing' the pensions and, given the history of corruption in Argentina, it is likely to be the case. No one I have spoken to expects to get anything by the time they retire. At the moment, an international judiciary has blocked the process since much of the pension money is in financial institutions around the world. The outcome of what will happen is unclear, but most folks seem to agree that the government will win, since the majority of the population seems to be resigned that these kinds of corrupt moves are simply 'the way it is'.
Now I don't think that the US has overt corruption, but the fact is that the Social Security system is facing eventual bankruptcy due to the fact that it has been a piggy bank for financing the government under both political parties for years. As a consequence, millions of Americans are facing the same kind of uncertainty as the population in Argentina. Hopefully, the process of changing Social Security will be slow enough and well enough managed to minimize suffering among our older citizens.
We can see equally sad, even tragic examples of pensions disappearing or being cut back through private sector management and business failures in companies like United Air Lines and Enron. We can predict the same sorts of shocks will happen in the auto industry. When companies go into Chapter 11, they often feel justified in walking away from their obligations to employees -- the money is gone. But this is a societal and moral issue. There is no excuse for a company or a government taking an employee's money and promising a pension in return and then spending, squandering or stealing that money for short-term expenditures no matter what.
The consequence of these practices -- whether legal or illegal -- amount to the same thing. They foster distrust, resignation and even cynicism on the part of the general population that in turn undermines individual participation and responsibility in the democratic process. When this occurs, the government becomes an even more self-serving enterprise and we all suffer falling into the kind of societal malaise that has haunted Argentina and other countries for decades. It is a vicious cycle of greed and self-interest that eventually destroys the society.
Desmond Tutu has created an organization called "The Elders" based on the belief that the older and hopefully wiser members of the society must take the lead in addressing these kinds of intractable problems. His organization is giving global visibility to the importance of 'seniors' participation in the political process if we're to make progress in bringing about social justice and environmental sustainability. But most of us do not have access (or in some cases, even interest) in planetary-scale issues. We care about the quality of life at the community level. We need to organize and empower elders at the community level and, at the same time, open channels of communication and collaboration between generations. This is what The Eldering Institute and The Eldering Manifesto are all about.
If you haven't already, I encourage everyone to sign the manifesto and give your voice to the possibility of a world that works for everyone.