My Granny used to say "It never rains but it pours", and 2010 is shaping up to be quite a downpour. When you add the impact of disasters such as the BP oil spill to the economic problems of countries whose bonds form part of pension funds, we have to ask the most basic question: "How can any country afford its retired population?"

BP's public relations machine was initially "spinning" news of its oil spill at full speed, and for good reason. Putting aside any questions of morality and ethics, we can argue that BP is one of those companies that is "Too big to fail". This is because such a failure would rock the global financial markets, pension funds, and philanthropic foundations in which BP and its dividends are embedded.

Since his meeting with President Obama, the chairman of BP has announced that the Company will not pay a dividend to its shareholders this year. "What's the problem?" you might ask, especially if you are not involved in financial markets. Well, our lifelong contributions to a pension fund are invested (or at least they should be) in relatively safe companies and countries in the form of shares and bonds. The dividends from shares and the interest on bonds should help to grow the pension funds for more people who are living longer.

If the funds invested do not grow to meet the demand for pensions, the smaller workforce left behind the Baby Boomer generation will have to pay more in taxes to fund not only the pensions, including Social Insurance, but also more in social services as more elderly fall into poverty. Several countries are now facing up to this fact.

France is responding by raising its retirement age to 62. The French have been able to retire at age 60 providing they paid into the social security system for 40.5 years, while civil servants receive a whopping 75 percent of their final salary. Given the average life expectancy in France is 81, we can see why the French government must raise the age of retirement.

Spain is also trying to rein in public spending while the new coalition government in the United Kingdom recently announced an 'austerity' budget more severe than any since the Second World War. In addition to income tax, the British must now pay 20 percent in VAT, or sales tax. Ouch!

In Greece, the problem is even worse. According to an article in The Times, Greeks can retire as young as 58 if they have worked for 35 years, although the standard retirement age is 61. The author asks if Germans will be expected to delay their retirement from 67 to 69 in order to fund the European bailout of Greek debt while Greeks protest the extension of their retirement age to 63. This, he says, will cause a war between the generations as younger workers revolt against paying for pensions and health care for retirees.

In addition to the effect on pensions of ageing populations, rising health care costs, economic downturns and catastrophes we have to look at philanthropy, or giving, by individuals, companies, foundations, and governments. There are reports that the Bill and Melinda Gates Foundation is heavily invested in BP and they use the dividends to fund their projects. No doubt this Foundation is not alone.

There are also reports that 30,000 non-profits in New York State are working without government funding because the State's budget has run dry. Most of these non-profits work with children at risk and the elderly.

Within our global economy, cause and effect are immediate. Bermuda is very much part of a global economy. As a result, we will feel the effects of the BP oil spill and not just in tar balls on the beaches.

Bermuda almost doubled its national debt during the recent global economic downturn. Now, the world economy is fragile, so-called secure investments are at risk, and our population is ageing. Even those depending on their rent for income are no longer secure as our housing bubble has burst, companies and workers are leaving the Island, and land-based tourism continues to decline.

How can we continue to pay out social insurance in addition to all the social services that this population needs without risking our own war of the generations?

Marian Sherratt is President of SORCOS, a social research and consulting firm. She writes on issues concerning our ageing population each month in The Royal Gazette. Send email responses to m.sherratt@sorcos.com">m.sherratt@sorcos.com