During the 1990s, international institutions were recommending reforms to raise the age of retirement, cut benefits and diversify the income streams of pensioners.

As the decade progressed, the viewpoints of the most ‘liberal' institutions (the World Bank and International Monetary Fund) and those organizations with a more ‘social' agenda (like the International Labour Organization and the International Social Security Association) became more convergent.  The ‘distribution' versus ‘capitalization' debate gradually faded, to be replaced by more pragmatic approaches at national level.

In fact, when viewed from a distance, the two types of system (distribution and capitalization) have fewer differences than may first appear to be the case: both require money to be set aside throughout a person's working life, with the promise of receiving a pension in retirement.

In a capitalization scheme, the pension is guaranteed and paid by a private pension fund, and the return on the sums invested depends on interest rates, whereas a distribution scheme is underwritten by the State, and the return on investment depends on economic growth.

In recent decades, interest rates have been generally higher than growth rates; hence the superior return promised by capitalization systems. On the other hand, these systems have proved less predictable in the short term, as we have seen from the global financial crisis of 2008.

This then is the often-defended basis for the argument to diversify pension systems by, for example, combining capitalization and distribution systems and compulsory systems with optional savings. Or indeed, by creating distribution systems that, from the point of view of policyholders, operate as capitalization systems: these are the so-called notional account systems.

These various solutions have inspired many reforms around the world over the past fifteen years. In most cases, they will have to be complemented by new measures.