Book reviews for The Journal of Pension Economics and Finance reflect reviewers' own views and in no way represent the views of the institution(s) with which they are affiliated.

Public and private pension systems around the world are facing a variety of economic and demographic pressures which are increasing the cost of providing retirement benefits. The evolution of retirement systems is being driven by population age structure changes, greater life expectancy, economic fluctuations, and slowing real growth. Throughout the world, the basic structure of pension plans is shifting from defined benefit plans to defined contribution plans, plans are being amended to provide less generous benefits at lower costs and retirement ages are being raised. Sylvester Schieber argues in his book that these changes, at least those in the United States, were predictable decades ago and the roots of these changes can be found in political decisions made over the past 75 years.

Schieber documents the evolution of the U.S. Social Security System and the American employer pension system. His analysis shows how economic, political, and regulatory decisions gave rise to a system that is not sustainable in the face of demographic changes of the past century. Lower fertility, lower mortality, and the aging of the population have substantially increased the cost of providing retirement benefits. Chapters 3–11 of the book provide a detailed history of the early days of Social Security and the decisions that were made that led to the current funding problems facing the national retirement system. The role of Congress, President Roosevelt, and other policy-makers is reported using historical documents that illustrate the thinking of the originators of Social Security. Building on this history, Schieber examines the current funding problems of Social Security and the need for action to modify the system for the 21st century demographic and economic conditions. It should be noted that the financial status of Social Security has continued to worsen since the publication of this book which only increases the importance of understanding the problem and how we arrived at the funding crisis and the importance of addressing these fundamental problems now.

Chapters 12–20 focus on the diverse system of employer pensions that provide much of the retirement income to many American workers. His historical reporting of major developments such as the collapse of the Studebaker pension plan, the passage of the Employee Retirement Income Security Act, and other important legislation illustrates how federal regulation has shaped and altered employer retirement plans. Schieber highlights how regulations have interacted with economic conditions to affect the funding of defined benefit plans. He notes the pension funding holidays which arose in boom times but were driven in part by full funding limits. Declines in equity markets in the past decade have sharply reduced funding ratios and placed financial burdens on plans to increase pension contributions in bad economic times. These conditions have contributed to the rise of defined contribution plans that have shifted investment risk to individual workers. Throughout his analysis, Schieber discusses the advantages and disadvantages of both types of plans and provides insights into how the American retirement system will continue to evolve.

The final chapters of the book focus on the retirement security of older Americans and how it will be affected by changes in the U.S. retirement system that he anticipates. These chapters provide the reader with considerable data that should help them understand today's problems associated with these plans. He considers a range of topics including why individuals do not purchase annuities and the rapid decline in employer provided retiree health plans.

Throughout the book, Schieber places the development of public and private retirement plans within the broader context of the economic development of the U.S. He provides interesting and useful comments and personal references that emphasize the key points that he is making. The book is an excellent reference for experts and policy-makers but is also easy to read by those simply trying to understand the problems the nation is facing as it decides how to modify its retirement programs in order to continue to provide an adequate retirement income at a reasonable price.

Schieber served on the 1994–96 Advisory Council on Social Security and a decade later, he chaired the Social Security Advisory Board. He worked for two decades for a major consulting firm that advises large corporations on human resource issues including the management of the pension and health plans. His working knowledge of both public and private retirement plans and his interest in the evolution of these plans enabled him to make the keen observations that run throughout this manuscript. Those who have read Schieber's earlier books will recognize his readable style with many insightful asides accompanied by detailed historical documentation. Whether one agrees or disagrees with Schieber's policy recommendations, The Predictable Surprise should be carefully read and its analysis considered as the U.S. confronts the challenge of modifying its retirement system.