A Special Report on Aging Population

Topics: Pension, Retirement, Population Pages: 61 (13496 words) Published: February 25, 2014
A special report on ageing populations June 27th 2009

The Economist June 27th 2009

A special report on ageing populations 1

A slow-burning fuse
Also in this section
Su er the little children
Most of the rich world is short of babies.
Page 3

A world of Methuselahs
The bene ts, and the costs, of living longer.
Page 4

The silver dollar
There is money to be made in the grey
market, but it takes thought. Page 6

Scrimp and save
Pensions will have to become far less
generous. Page 7

Work till you drop
Retirement has got out of hand. Page 9

China’s predicament
Getting old before getting rich. Page 11

Into the unknown
The world has never seen population ageing
before. Can it cope? Page 13

Acknowledgments
Many people helped with the preparation of this report. In
addition to those mentioned in the text, particular thanks
go to Andrew Biggs, David Bloom, Gary Burtless, Mariko
Fujiwara, Chiemi Hayashi, Ludwig Kanzler, Je rey
Kingston, Laurence Kotliko , John Llewellyn, Lu Jiehua,
George Magnus, Atsushi Seike, Machiko Osawa, Haruo
Shimada, Richard Suzman, David Wise and a wealth of
experts at the OECD.
A list of sources is at

Economist.com/specialreports
An audio interview with the author is at

Economist.com/audiovideo
More articles about ageing are at

Economist.com/ageing

Age is creeping up on the world, and any moment now it will begin to show. The consequences will be scary, says Barbara Beck

S

TOP thinking for a moment about deep
recession, trillion-dollar rescue packages and mounting job losses. Instead, contemplate the prospect of slow growth
and low productivity, rising public spending and labour shortages. These are the problems of ageing populations, and if
they sound comparatively mild, think
again. When the IMF earlier this month
calculated the impact of the recent nancial crisis, it found that the costs will indeed be huge: the scal balances of the G20 advanced countries are likely to deteriorate by eight percentage points of GDP in 2008-09. But the IMF also noted that in

the longer term these costs will be dwarfed
by age-related spending. Looking ahead to
the period between now and 2050, it predicted that for advanced countries, the scal burden of the crisis [will be] about 10% of the ageing-related costs (see chart 1 on
the next page). The other 90% will be extra
spending on pensions, health and longterm care.
The rich world’s population is ageing
fast, and the poor world is only a few decades behind. According to the UN’s latest biennial population forecast, the median
age for all countries is due to rise from 29
now to 38 by 2050. At present just under
11% of the world’s 6.9 billion people are
over 60. Taking the UN’s central forecast,
by 2050 that share will have risen to 22%
(of a population of over 9 billion), and in
the developed countries to 33% (see chart 2,

next page). To put it another way, in the rich
world one person in three will be a pensioner; nearly one in ten will be over 80. This is a slow-moving but relentless development that in time will have vast economic, social and political consequences. As yet, only a few countries with alreadyold populations are starting to notice the e ects. But labour forces are now beginning to shrink and numbers of pensioners are starting to rise. By about 2020 ageing

will be plain for all to see. And there is no
escape: barring huge natural or man-made
disasters, demographic changes are much
more certain than other long-term predictions (for example, of climate change). Every one of the 2 billion people who will be over 60 in 2050 has already been born.
The reasons why
What is making the world so much older?
There are two long-term causes and a temporary blip that will continue to show up in the gures for the next few decades. The
rst of the big causes is that people everywhere are living far longer than they used to. This trend started with the industrial
revolution...
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