1 Aging and solidarity in the United States : What we can learn and transfer to the European Union? Nyleñka Paille Jihann Kheladi Tachrifa Maoulida Morganne Van Den Berghe Magali Lecompte Guillaume Tlalka Finland 2013

2 SUMMARY  Overview of the American economy  Evolution of the elderly’s part in the United States  Place of the elderly in the American society  The US pension schemes  What reforms may be applied in Europe ?

3 Overview of the American economy  World's largest economy with dynamic sectors  The largest importer of goods and third exporter  Unemployment rate : 7.7 %  HDI : => 3rd rank

4 Evolution of the elderly’s part in the United States

5

6

7 Place of the elderly in the American society  Nearly 1/5 of the Americans continue to work beyond 65 years  Thus, one of the first activities of the elderly is work, with the opportunity to change careers or pursue new interests  They are involved in the community and are active members of many associations  Individualistic society that puts “apart” the elderly

8 The US pension schemes Social Security  96% of American employees contribute to the social insurance scheme  The pensions provided by the Social Security are calculated based on the number of years worked, contributions and inflation  The payment of benefits is based on what the employee has earned during his/her career

9 The US pension schemes Social Security  The benefit can also be affected by the age at which the employee decides to retire. Date of birthAge of retirement at the full rate 1943 to years old years and 2 months years and 4 months years and 6 months years and 8 months years and 10 months 1960 and thereafter67 years

10 The US pension schemes Social Security  This plan must be funded solely from contributions levied on wages (that are the same between employers and employees)  Employee contributions are collected at the same time and by the same channels as the income tax. That’s why they are seen as tax and not as contributions

11 The US pension schemes Social Security  To enjoy a comfortable retirement, a person will need 70 to 80 % of his/her income. Social Security will replace about 40 percent of previous income.

12 The US pension schemes Pensions provided by firms  Today, about 21% of the private sector employees and 71% of employees of state are members of a pension plan with defined benefits. These rates are declining  The private pension plans are guaranteed by employers, or by employers and unions

13 The US pension schemes Funded pension  Funded pension operates on the principle of accumulation by workers of a stock of capital used to finance the future pensions  To variations of capital due to purchases, sales and reinvestment of the revenues is added variations depending on the overall economic situation, on bubbles that increase the capital gain, and on crisis that reduce it

14 The US pension schemes Additional federal aid  The poorest pensioners receive additional federal aid (the OASDHI) and care (Medicare)

15 The US pension schemes  Income structure of the elderly by income quintile, 2010

16 What reforms may be applied in Europe ?  Adapting the statutory retirement age and contributions to longevity  Increasing the effective retirement age by eliminating early exit pathways from the labor market  A higher participation rate for women  Developing multi-pillar systems to release the load on the public liabilities

17  Lowering benefits on existing pension schemes  Promoting the creation of new jobs towards the elderly (companionships, etc.) What reforms may be applied in Europe ?

18 Conclusion  The American system is in crisis, notably because the part of the pension provided by the Social Security is very low and isn’t sufficient to survive.  Concerning the pensions provided by the firms, many people are not eligible. That’s why many people have to work after retiring, because they don’t have enough money to survive.  Finally, Americans are very individualistic and don’t want to pay more tax so that helping each other.

Thank you for your attention 19