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A pension system seeks to reduce poverty among older persons by providing adequate income security. Well-designed pension systems have reduced poverty rates of the elderly to lower levels than for any other age group in the population. Nonetheless, many countries lack adequate pensions. Without income security, the elderly are forced to rely on their families, continue working, or live in poverty. Providing meaningful pension benefits is increasingly important for several reasons.

First, the world is undergoing population aging as increasing longevity is combined with declining fertility. Almost 70 percent of persons aged 65 and older live in developing countries, and this percentage is expected to increase, particularly in the Middle East, eastern Europe, and central Asia. Pension systems thus face both greater demand from larger numbers ...

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