The trouble with state pensions is that politicians usually have a decision making horizon that reaches no further than the next elections. I will take the Dutch history as an example because I am most familiar with it, but I know for a fact that in most developed countries public pension systems suffer the same type of problems. Typically, state pensions are funded on a "pay as you go" basis, which means that tax/premium payers today do not "save" for their own pensions but pay for the pensions of current pensioners. This choice is made by politicians because starting a state pension system sounds much nicer if you can promise people who never paid a dime for it a full pension when they turn 65 anyway. Thus my grandfather (born 1900) never knew he would get a free pension until the law was implemented in 1956, and had been saving/investing for his retirement for a long time, when suddenly a majority in parliament decided to implement a state pension for everyone over the age of 65. Hurray, double income for my grandfather after retirement (more votes for the politicians). Sadly, pay as you go systems work well while the population in a country looks like a pyramid (many youngsters, few pensioners), but they cause substantial problems when a population stops growing or even shrinks (less people paying the pension premiums, more pensioners). Of course, politicians were warned by actuaries (insurance math scientists), economists and demographers. Amazingly demography (population studies) is pretty much an exact science, where long term predictions like "how many babies will be born 10 years from now", and "how many pensioners will there be 15 years from now" are very reliable. But despite these warnings no measures were taken until it was too late for a smooth solution and there was no alternative but to hike up the age at which people can retire. So suddenly I and everyone else below 65 were told that instead of being able to retire at 65, we had to work another 2 years. Luckily in the Philippines the population graph will continue to look like a pyramid for the next 20 years or so at least, so they still have time to avoid the mistakes of the developed world. Sadly I have the feeling that they will not (they're politicians after all).