Sunday, November 4, 2018

Old age: responding to a rapidly ageing population

 The number of persons aged 60 and over is projected to double from 2015 to 2050.4 As the share of older persons continues to grow in countries around the world, the need to guarantee their income security will become increasingly urgent. In countries with comprehensive social protection systems, older persons can rely on pensions to partly meet their needs. In many developing countries, however, a high proportion of older persons receive no public support whatsoever and face high economic and social insecurity.

Old-age pensions account for more than half of all public spending on social protection (excluding health expenditure). While 68 per cent of the world’s older population received a pension in 2016, significant regional and gender disparities were found. Only 26 per cent of people above retirement age received a pension in Central and Southern Asia, and 23 per cent in sub-Saharan Africa (United Nations, 2017a). Moreover, the rate of pension coverage is still lower for women than men in all regions, despite the fact that women tend to live longer.

Countries that rely exclusively on contributory pension schemes to provide oldage income security largely fail to achieve universal coverage. But while coverage is still insufficient overall, rapid progress has been made in the last two decades. Over 90 per cent of populations above the statutory retirement age received pensions in 53 countries in 2016, versus 34 countries in 2000 (ILO, 2017a). Effective coverage has increased in almost all developing countries. Many of them are now reaching more people through tax-funded (social) pensions. However, when targeted to older persons living in poverty, pension systems typically leave a significant coverage gap: a “missing middle” of older persons who are not living in poverty but who may nevertheless be vulnerable to it.

Meeting the needs of a rapidly expanding older population will be critical to achieving the SDGs. As the share of older persons grows, Governments will need to find the right balance between expanding coverage while providing adequate benefits and ensuring the long-term sustainability of pension schemes. While very generous pensions may not be sustainable, inadequate pensions jeopardize the well-being of older persons and their participation in social life. They may also erode trust in the State and result in less willingness to pay the taxes and contributions that are necessary to ensure income security in old age. The commitment to leave no one behind and promote inclusive societies calls for safeguarding or even strengthening the poverty-reducing role of pensions, even where reforms to cut overall pension costs are deemed necessary.

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