It’s no secret that pensions are important. We rely on them a lot, to provide us with peace of mind, security in our older years, and the ability to stop working when we reach our sixties.
But pensions are also a big source of worry. About half of all people over 50 view retirement concerns as their biggest financial worry, more than immediate issues.
In addition to this, pensions are generally misunderstood. On the whole, people tend to lack knowledge on how pensions work and how best to manage them. This is bad — not just because it means they’ll be less effective at saving a pension but also because it leaves them vulnerable to fraud and crime.
The result of all this confusion is that quite a few myths have been allowed to grow. One of the biggest myths surrounding pensions is the notion that our current pensions infrastructure is the safest and most reliable way to manage our pensions.
In reality, there’s a lot wrong with the current system. It’s unreliable, susceptible to fraud and corruption, unstable, and often fails to put individual people first.
Let’s break down these problems a little more.
Why your pension isn’t safe in the current system
The pension infrastructure in the developed world is dominated by centralized institutions — governments and private pension companies. Both of these have serious issues.
Governments — pretty much across the board — have proven themselves unable to properly manage our pensions. Among the 20 biggest OECD countries, there’s a combined pensions shortfall of $78 trillion, which is rapidly growing.
In the U.S. alone, the pensions shortfall is increasing by about $3 trillion every year. That’s five times more than America’s annual defense budget.
Already, 48% of retirement age people are not receiving any pension. As the system comes under greater strain this will almost certainly increase.
The shortfall with private pensions isn’t quite as severe, although it still exists. U.S. private pensions as a whole only have 82% of the funds necessary to meet their liabilities, and in the UK the overall funding level was only 67.7% as of last year.
In addition to this, private pensions have their own issues to deal with, and one of them is corruption.
Take the example of Enron, who fell victim to accounting fraud which led to 5000 workers losing not only their jobs but also the majority of their pensions.
After the British construction firm Carillion collapsed, its workers were left in a similar position, worrying about the future of their pensions and likely facing some loss.
The point here is that people simply can’t rely on private companies to look after their pension funds. And governments aren’t exactly a great source of hope either. The track record of these centralized bodies is so poor that it’s hard to place any trust in them.
Despite this, we’re led to believe that this is the best way. The blockchain industry is working to debunk that myth.
Startups like Akropolis seek to offer an alternative to the pensions status quo. Akropolis believe that decentralization is a better way to approach pensions and should replace a system that depends heavily on centralized third-parties.
Its blockchain-based platform makes pensions more transparent and secure, allowing users to manage their pensions directly instead of putting their faith in third parties which many not have users’ best interest at heart.
The system is built around clarity rather than with tricky and manipulative provisions. It promotes straightforward and plain terms and conditions that make it easy for users to understand the rules.
Blockchain is highly resistant to corruption by design. It makes it extremely difficult for malicious actors to hijack the system to commit fraud. Users can rest assured that their pensions are safe.
More than anything, Akropolis empowers individual pension holders with control over their portfolios. They will be able to make decisions and enter into secure financial relationships with funds of their own choosing instead of relying on incompetent government schemes and untrustworthy private companies.
It’s time to face the truth. Our pensions plans are in dire straits, and blockchain might truly be a game changer in this industry. The old “black box” model is outdated, and it’s about time transparency and ease of access take over.