Population change and the economic security of older people in Asia

For more about the East-West Center, see http://www.eastwestcenter.org/Populations are growing older everywhere in the world, but the pace of population aging in Asia is unprecedented, primarily linked to rapid fertility decline. Asia's rapid population aging has led to policy concerns about how the region's growing elderly populations will be cared for and supported. How many of today's elderly remain in the workforce, and how much do they earn? To what extent do they support themselves from assets acquired during their working years? How do families and governments meet the needs of elderly people who consume more than they produce? And what does the future hold? Analysis by the National Transfer Accounts (NTA) project suggests that capital accumulation can potentially make a strong contribution toward meeting the needs of Asia's growing elderly populations. If the needs of the elderly are met through greater reliance on saving during the working years, then population aging will lead to an increase in assets that also has favorable implications for economic growth. Investment in human capital is another important response to population aging. Improvements in the productivity of each worker--fostered by investment in child health and education--can help maintain economic growth even as the working-age population shrinks relative to the elderly. The sheer speed and scale of population aging in Asia add a sense of urgency as policymakers start planning for a grayer future. Leaders would do well to learn from the policy mistakes of advanced economies, including fiscally unsustainable pension systems and rigid requirements for early retirement. Once inappropriate old-age support programs become entrenched, they become politically very difficult to reverse. By contrast, programs that invest in children's health and education and foster capital accumulation will ensure support for tomorrow's elderly populations while sustaining economic growth that benefits everyone