SHAPING THE FUTURE HOW CHANGING DEMOGRAPHICS CAN POWER HUMAN DEVELOPMENT

Proper design
and appropriate
institutions can ensure
pension systems are
sustainable
192
advanced stage of ageing (Box 6.1).
Rebalance health systems. Population ageing
will undoubtedly place an increasing burden on
national health care services and budgets. At
least part of this can be mitigated by proactive
strategies to foster active and healthy ageing,
such as through awareness campaigns to cultivate
healthy lifestyles and reduce the escalating costs
of chronic non-communicable diseases. This
approach requires an assessment of the health
system as a whole and the needs of different
population groups, working towards the goal
of universality, and aligned with principles of
equity, fairness and efficiency.
Having already passed through the early
stages of demographic transition, some ageing
countries still retain a heavy focus on primary
health care, particularly child and maternal
health. At a more advanced stage of transition,
rebalancing may be required to better meet
the needs of older people. Among other measures,
this may call for stronger financial and
programmatic commitments to support prevention,
diagnosis, management and proper care of
non-communicable diseases; training of health
workers to explicitly address age-related care; and
investment in care for disabilities and mental
health services geared to the elderly, particularly
these who are poor and/or live rural areas.
Raise the retirement age, and ensure it is the
same for women and men. In several countries,
mandatory retirement ages no long reflect the
reality that people are living much longer. Raising
the retirement age could have a number
of positive impacts, including a boost to the
supply of experienced and skilled labour, which
is critical for Asia-Pacific countries to remain
competitive, and contributes to higher household
incomes and savings. Government savings will
rise because lifetime benefits paid to retirees
will be smaller.
To uphold gender equality norms, retirement
ages should legally be the same for women and
men. Working environments could be adapted
to accommodate the physical and health
conditions of elderly people, and more flexible
work conditions embraced to encourage older
people to remain in the workforce. Flexible
and part-time employment options may be
especially attractive to women, who make up
a majority of the elderly, but a minority of the
elderly workforce. Asia-Pacific countries can
learn from experiences in China, Indonesia,
the Philippines and Viet Nam, which have introduced
programmes promoting employment
for elderly people.
Several countries have instituted higher
retirement ages or abolished a compulsory retirement
age altogether. Higher longevity and
healthier lives have led Japan and the Republic
of Korea to increase their retirement ages to
60. Singapore not only raised the minimum
retirement age from 55 to 62, but in 2011 passed
re-employment legislation through which companies
must rehire healthy workers until they
reach age 65. Recently, Singapore’s Prime Minister
announced that the re-employment age
will be raised to 67 by 2017. 10 Australia, the
United States and the European Union have all
adopted flexible approaches to retirement that
allow people to remain employed according to
their individual circumstances.
Adjust national pension systems for equity,
adequacy and sustainability. Pension systems
are still at an early stage in the region, but will
need to grow—rapidly in many cases. This will
not be easy or cheap. Choices may be needed
to balance priorities across generations and develop
social consensus around what constitutes
fair shares of limited resources. Proper design
and appropriate institutional mechanisms can
help contain expenditures. In general, pension
systems should aim to be progressive, where
pension benefits are equitably shared, and those
with the capacity to contribute more do so. A fair
floor of essential benefits could be established
for all pensioners, while avoiding the trap of
setting overly generous benefit levels that are
a disincentive to work or unsustainable in the
long-run.
There are numerous pension models around
the world to learn from. A majority of countries
operate with contributory pension schemes,
where both workers and their employers contribute.
In the United States, for example, approximately
80 percent of full-time workers
have access to employer-sponsored retirement
plans that can be continued as people move
between jobs. In New Zealand, the KiwiSaver