Addressing the Challenge of Global Ageing?Funding Issues and

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16 Addressing the Challenge of Global Ageing—Funding Issues and Insurance Solutions
How demography is reshaping the economic and social landscape of the 21 st century 1. How demography is reshaping the economic and social landscape of the 21 st century Richard Jackson Ten or fifteen years ago, global ageing barely registered as a policy issue. Today, with large age waves looming just over the horizon in most of the world’s leading economies, it has become the focus of growing concern. Much of the concern, especially in the developed world, is focused on reducing the rising fiscal burden of pay-as-you-go state retirement programmes that were put in place back in the early postwar decades when workers were abundant and retirees were scarce, but which are now being rendered unsustainable by the collapse in birthrates and the steady rise in life expectancy. Meanwhile, in the developing world, countries are waking up to the prospect that they may grow old before they grow rich. While today’s fully developed economies were all affluent societies with mature welfare states by the time they became ageing societies, many of today’s emerging markets are ageing before they have had time to put in place adequate government and market substitutes for informal family support networks. If the challenge for most developed countries is how to ameliorate the growing burden on the young, the challenge for most emerging markets is how to ameliorate the growing vulnerability of the old. Beyond this old-age dependency challenge, countries are also beginning to worry about how global ageing will affect the dynamism of their economies, the mood of their societies and even their place in the world order. Demographic trends, after all, can play a central role in determining everything from rates of savings and investment to rates of employment and productivity growth. As populations age—and grow more slowly or contract—what are the implications for growth in the standard of living, business psychology and electoral behaviour? Most fundamentally, will ageing societies be able to meet the needs of the old while maintaining opportunity for the young? Despite the growing concern about global ageing, the full implications are not well understood by policymakers, corporate decision-makers or the public. The purpose of this chapter is to help raise awareness of this challenge and promote constructive policy responses. The first section briefly reviews the scope and causes of the unprecedented demographic transformation now sweeping the world. The second section focuses on the central old-age dependency dimension of the global ageing challenge—that is, the challenge of balancing fiscal sustainability and income adequacy. Here the analysis draws on the results of the Center for Strategic and International Studies’ (CSIS) Global Aging Preparedness Index (or GAP Index), a unique new tool for assessing “ageing preparedness” on a comparable basis across countries. The third section expands the 17
Page 1 and 2: No. 6 June 2012 The Geneva Reports
Page 3 and 4: Addressing the Challenge of Global
Page 5 and 6: Contents Foreword John R. Strangfel
Page 7 and 8: Foreword John R. Strangfeld Ageing
Page 9 and 10: Editorial and executive summary Edi
Page 11 and 12: Editorial and executive summary per
Page 13 and 14: Editorial and executive summary the
Page 15 and 16: Editorial and executive summary mos
Page 17 and 18: Editorial and executive summary nex
Page 19 and 20: Editorial and executive summary thi
Page 21: Part 1 Analytics 15
Page 25 and 26: How demography is reshaping the eco
Page 39 and 40: 1. Introduction Global ageing: root
Page 41 and 42: persist such as control of chronic
Page 43 and 44: Global ageing: root causes and impl
Page 45 and 46: is provided for more money. The oth
Page 47 and 48: The main and most direct impact of
Page 49 and 50: Global ageing: root causes and impl
Page 51 and 52: Insurance as a funding and risk tra
Page 63 and 64: Pension funds make pre-agreed fixed
Page 65 and 66: Sources: Swiss Re Economic Research
Page 67 and 68: 4. The financial crisis: impact on
Page 69 and 70: The financial crisis: impact on the
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tors 90 Japan The financial crisis:
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The financial crisis: impact on the
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Part 2 Solutions and Prerequisites
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Funding for old age: an overview an
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Through this rider, retirement inco
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1. Introduction 6. Insurance as a s
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Private financing also plays an imp
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4. The markets for LTC insurance Th
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Insurance as a solution to cover lo
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7. Other insurance products to cove
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1. Introduction The insurance indus
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workers have pension benefits that
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The insurance industry’s role in
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The insurance industry’s role in
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A traded longevity index does not p
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etirement age (as is happening in m
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1. The world of finance and the rea
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The holistic view: why all pillars
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What should be done: some recommend
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Retirement security in the United S
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And as for the second question pose
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Part 3 Effects on Key Stakeholders
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1. Introduction The challenge of pu
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The challenge of public pension ref
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Replacement rate 2050 70 60 50 LUX
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It is expected that the market for
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tax pensions at a lower rate. Where
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Figure 2 Funding rules under the Pe
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Asset management strategies such as
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Impact of a pension buy-in Plan spo
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1. Background Although the scope an
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Insurers are experts in managing th
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Figure 1: Inflation-adjusted growth
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7. Insurers as investors 6 Insurers
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(cf. NAIC data for 2002-2009). Over
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Insurers and their role in the econ
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14. Individuals and their financial
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Pension asset accumulation When con
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who continue to take the lead in re
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in 2009 showed that product penetra
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Over one-third of those in their 50
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lead to sub-optimal consumer outcom
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References Individuals and their fi
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About the authors About the authors
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About the authors Margaret (Peggy)
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About the authors Gordon Stewart se
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Publications of The Geneva Associat
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Publications of The Geneva Associat
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Other publications of The Geneva As
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The Geneva Association and Life, He
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The Geneva Reports Risk and Insuran
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