The timing and method of the government’s retreat from the banking and insurance world is crucial. But it is equally important that the sector regains the confidence of society. Adjustments in the pension system are needed too. The more difficult it becomes to increase contributions, the more uncertain the pension results and the greater the incentive to lower the pension target.
This situation is, in part, a legacy of many years in which a number of governments spent much more than they raised in taxes, with bondholders being more than willing to finance the difference at low interest rates.