The ISSA is marking the UN International Day by highlighting the critical role of social security in meeting society’s objectives in respect of older persons – and by looking back at some of the themes and challenges discussed at Madrid, and which are increasingly relevant today.
Demographic ageing and social security
According to the UN, an estimated 737 million persons were aged 60 years or over in 2009, nearly two-thirds of whom lived in developing countries. Their number is projected to increase to two billion in 2050, by which time older persons will outnumber children (persons aged 0 to 14 years). The impact of demographic changes is recognized as one of the most important challenges that social security institutions will face in the future.
Demographic factors are a key driver of change in social security provision and are influencing the financing requirements of many schemes. Increasing longevity directly affects the cost of retirement provision, but the broad nature of demographic changes also influences the provision of other benefits such as health and long-term care, disability and unemployment.
"The International Day of Older Persons is an excellent opportunity to observe the progress and changes made in social security provision over a decade," said ISSA Secretary General Hans-Horst Konkolewsky on the occasion of the International Day.
"In view of the evolving needs of older persons in both developed and developing countries, the role of social security policies and instruments will increasingly be to act as agents of change and not only react to these demographic changes,” Konkolewsky stated.
Over the last ten years, demographic pressures have evolved. ISSA research has highlighted the impact of demographic changes on social security systems worldwide and the ISSA has worked with social security institutions to identify and promote innovative and practical solutions to the challenges.
Ten years on: What has changed since Madrid?
The UN World Assembly on Ageing in Madrid in 2002 highlighted the central importance of population ageing for societies in the coming decades. Following the conference, the ISSA produced a report entitled Ageing and Social Security: Ten Key Issues as a contribution to the implementation of the Madrid International Plan of Action on Ageing.
The report highlighted ten key issues for policy-makers to consider, and reflected concerns about the sustainability of social security schemes in the context of these challenges. But the report also emphasized the importance of social security systems as a factor of social cohesion and as a tool to meet other policy aims, such as reversing the trend of increased early retirement and reducing job insecurity.
The ISSA report analysed the role of state and private provision in ensuring adequate income for older persons, and the interaction between these two. Related to this was the question of how risks can be limited for retirement benefits – a subject more relevant than ever in the light of the recent market volatility and the impact on privately-funded pension provision. The report also identified health care and long-term care costs as a key challenge – in many countries, health-care costs have increased by over 50% since the report was written.
Preparing social security for tomorrow’s world
Nearly ten years on, many of these issues remain relevant. The increasingly complex nature of demographic changes include population ageing coupled with family changes, increased migration flows and urbanization, all of which will pose challenges for social security.
The ISSA has sought to give greater emphasis to holistic approaches, looking at ageing in the context of wider demographic change, and by focusing on prevention as a key measure to mitigate the impacts on social security systems.
In a report prepared for the World Social Security Forum in 2010, the ISSA highlighted ten responses to address the impacts of demographic change, including a series of proactive measures. According to the report, social security should incorporate the roles of protection, prevention and promotion. A priority was to address pension system sustainability. Societies had important choices to make about the proportion of resources to be shared between generations. Measures to ensure the provision of sufficient levels of finance were necessary, as were practical measures to ensure delivery of benefits. By using a plurality of measures in a proactive manner, involving changes to attitudes and behaviour, improved performance was possible at all levels.
Demographic trends are embedded with uncertainties, therefore social security policies and instruments will increasingly play the role of agents of change and not merely reactive tools, to better face the future. These challenges should not be seen as burdens for social security; they also represent an opportunity for social security to demonstrate its efficiency and effectiveness, and the ISSA is committed to working with social security organizations worldwide to prepare for tomorrow’s world.