Addressing the Challenge of Global Ageingâ€”Funding Issues

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32 Addressing the Challenge of Global Ageing—Funding Issues and Insurance Solutions References Autio, E. (2007) Global Entrepreneurship Monitor: 2007 Global Report on High-Growth Entrepreneurship, Global Entrepreneurship Monitor (GEM), Babson Park, M.A.: Babson College; and London: London Business School. Bloom, D.E. and Williamson, J. (1998) “Demographic Transitions and Economic Miracles in Emerging Asia”, World Bank Economic Review 12(3). Oxford, U.K.: Oxford University Press. Bloom, D.E., Canning, D. and Malaney, P.N. (1999) Demographic Change and Economic Growth in Asia, CID Working Paper no. 015, Center for International Development, Cambridge, MA: Harvard University. Cincotta, R.P., Engelman, R. and Anastasion, D. (2003) The Security Demographic: Population and Civil Conflict after the Cold War, Washington, DC: Population Action International. Dadush, U. and Stancil, B. (2010) The World Order in 2050, Policy Outlook, Washington, DC: Carnegie Endowment for International Peace. Esty D., Goldstone J., Gurr T., Harff B., Levy M., Dabelko G., Surko P. and Unger A. (1998) State Failure Task Force Report: Phase II Findings, McLean, VA: Science Applications International Corporation. Jackson, R. and Howe, N. (2008) The Graying of the Great Powers: Demographics and Geopolitics in the 21st Century, Washington, DC: Center for Strategic and International Studies (CSIS). Jackson, R., Howe, N. and Nakashima, K. (2010) The Global Aging Preparedness Index, Washington, DC: Center for Strategic and International Studies (CSIS). United Nations (2011) World Population Prospects, 2010 Revision, Population Division. Urdal, H. (2006) “A Clash of Generations? Youth Bulges and Political Violence,” in N. Birdsall, A.C. Kelley and S. Sinding (eds) Population Matters: Demographic Change, Economic Growth, and Poverty in the Developing World, Oxford, U.K.: Oxford University Press.
1. Introduction Global ageing: root causes and implications for key stakeholders 2. Global ageing: root causes and implications for key stakeholders Christophe Courbage and Patrick M. Liedtke The world is confronted with rapidly ageing populations. The surge of the baby boom generation and further gains in longevity are leading to an increasing proportion of older people in the world. This trend is exacerbated by fertility rates that are below the replacement rates. While increased longevity is undeniably a great achievement for societies, ageing populations present unprecedented challenges for societies, governments and private markets since many of the systems in place to deal with such dynamic developments are not robust enough to guarantee longer-term stability and affordability. Ageing has implications on both the micro-and macro-economic levels. On the microeconomic level, the ageing of the working population affects labour productivity as well as consumption and saving behaviours, with wide implications for capital and goods markets. On the macro-economic level, labour is becoming relatively scarce while capital becomes relatively more abundant, which impacts the relative price of labour and capital. Numerous economic actors are influenced by global ageing: governments, individuals, employers and insurers. Governments face an unprecedented drain on their finances as older age cohorts start drawing more funds while providing less tax and social security contributions. Individuals face the risk of outliving their assets as their future longevity overtakes their own estimations. Employers face shortfalls in the labour force and higher occupation pension scheme liabilities. Insurers are exposed to global ageing not only through their life, health and accident insurance products, many of which have expense components in them that correlate positively with ageing populations thus driving costs, they are also exposed as employers and active parts of the economic system. At the same time, global ageing offers them huge opportunities to exploit their special expertise in providing old-age income and security to large parts of society. This is especially the case since global ageing pushes governments and employers to shift retirement risk to individuals, creating opportunities for insurance-based solutions. This chapter reflects on the nature of global ageing in order to address the implications of ageing on society and more particularly on specific economic actors. In the next section, we will provide some insights on ageing and disability. The following sections will deal with the impact of global ageing on public finances, individual old-age income, employers and insurers. Finally some concluding remarks will be provided in the last section. 33
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 and 22: Part 1 Analytics 15
Page 23 and 24: How demography is reshaping the eco
Page 37: How demography is reshaping the eco
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
Page 71 and 72: 220 210 200 190 180 170 160 150 140
Page 73 and 74: tors 90 Japan The financial crisis:
Page 81 and 82: Part 2 Solutions and Prerequisites
Page 83 and 84: 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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