International Asia Longer life expectancy adds to global disruption

Longer life expectancy adds to global disruption

An ageing population comes with significant costs and raises many issues that policymakers need to address including less income coming into public finances and more money going out to handle increased healthcare and pensions

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A report by MAPFRE Economic Research shows that an aging population with a longer life expectancy is one of the greatest challenges of our times and can be as disruptive as overpopulation.

The globe has a population of 7.7 billion according to the latest stats, but continuing and a marked reduction in fertility rates, together with the increase in life expectancy outline a process in the demographic transition in our time.

An ageing population comes with significant costs and raises many issues that policymakers need to address. It means less money coming into public finances and more money going out to handle increased healthcare and pensions, says the report.

One of the most visible consequences of the increase in life expectancy is the direct impact it will have on the group on which the ageing population will depend.

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“This (development) undoubtedly constitutes one of the landmarks in the history of humankind,” says Antonio Huertas Mejías Chairman and CEO of MAPFRE.

As with all major social changes, the increase in the percentage of elderly people will bring huge challenges for the structure of society and for the institutions on which that structure is founded, Mejías says.

“However, this emerging pattern will also offer opportunities for revitalizing social and economic organisation, based on a longer-living population that can — with an implementing of the right public policies — become a powerful resource in the process of transformation and innovation that will shape the society and economy of the future,” he says.

The population aging process is having an impact on key aspects of its development, such as the dynamic of economic growth and the maintenance of pension and health systems.
The report presents a general framework of analysis around the implications that the demographic transition will have from a structural point of view for the economy. Two of the main areas of the insurance industry’s activity will be impacted: pension schemes and health systems.
Singapore’s healthcare comes into the limelight in the study, which says “MediSave” helps citizens have a fund that is built up while they are healthy to meet future healthcare costs.
This analysis clarifies that in the next few decades, countries such as Hong Kong, Macao, Japan, Martinique, Singapore, France, Guadeloupe, Spain, South Korea, Switzerland and Italy will have life expectancies at age 65 of 25 years upward in the 2055-2060 period and around 30 years by the end of the century, while the countries of Sub-Saharan Africa are the ones that will have lower life expectancies.
It also says in the next four decades, countries such as South Korea, Taiwan, Japan, Portugal, Greece, Singapore, Spain, Poland and Hong Kong will exceed the ratio of 35% for people over the age of 65. Currently (2019), the countries with the highest ratios are Japan (27.9%), Italy (23.6%), Portugal (22.3%), Finland (22%) and Germany (21.9%).
Singapore will reach dependency ratio values of less than 1.5 people of working age for each person reaching retirement age in 2059.
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