Priorities for social security Global 2022

Trends, challenges and solutions

Priorities for social security Global 2022

Trends, challenges and solutions

Meeting the needs of an ageing population

Introduction

Population ageing is a global phenomenon, a fact recognized in April 2002 by the United Nations at the Second World Assembly on Ageing, which took place in Madrid. There are no exceptions to the general trend: the common assumption that some continents (such as Asia or Europe) are “older” than others (such as the Americas or Africa) does not reflect the reality. Every region is affected by ageing, although some subregions (East Asia, Western Europe, North Africa, Southern Africa and the Southern Cone) have reached a more advanced stage than in others (sub-Saharan Africa, Central America, South East Asia and the Pacific). In the latter regions, the ageing of the population is less advanced, but will become more pronounced.

This issue was therefore included in the United Nations Development Agenda. It calls for age-inclusive societies and requires each Member State to take into account the cross-cutting impact of ageing as they work towards the United Nations Sustainable Development Goals. The fight against poverty in old age, age equality and health protection in later life are priority objectives (UN, 2020).
Regardless of the stage of population ageing reached, this development will place an increasing cost burden on social security systems, whatever their institutional backdrop and resulting organizational structure. Concerns arise in connection with longevity risk, such as standards of living among pensioners or the fight against poverty in later old age. Beyond this, however, the ageing population will also entail a shift in population morbidity profiles, requiring adaptation at an institutional level. This adaptation will be easier to achieve if it can build on an existing foundation of resilient institutions. There is a prerequisite for this resilience: the formalization of the economy.

Facts & trends

Demographic snapshot and provision of long‑term care

Figure 1. Growth of population aged 65-80+, 2020-2050, in % of the total population

Source: UNDESA (2022).
  • Between 2015 and 2050, the proportion of the world’s population over 60 years will nearly double from 12% to 22%. (WHO, 2021a)
  • The number of persons aged 80 years or older is expected to triple between 2020 and 2050 to reach 426 million. (WHO, 2021a)
  • Projected declining fertility rates from 2.42 in 2020 to 2.18 in 2050 are contributing to an increase in the share of the population aged 65 or older. (UNDESA, 2022)

Demographic snapshot and provision of long‑term care 2

Figure 2. Demographic old-age dependency ratio 2020, global estimates

Source: UNDESA (2022).
  • There are at least 142 million older persons (aged 60+) worldwide (14% of the global older population living in 42 countries) who lack the functional ability to meet daily needs. (WHO, 2021b)
  • Globally, the availability of formal long-term care services is low: 48% of older persons are not covered by any type of formal provision of services. (WHO, 2021c)
  • 49% of countries reported to have a long-term care policy or strategy in 2020. (WHO, 2021c)

Effective and legal old-age pension coverage of the working-age population

Figure 3. Legal old-age pension coverage of the working-age population (%)

Source: ILO (2021)
  • Globally, 49.6% of the population above the statutory pensionable age receive a contributory old-age pension; 44.5% receive a non-contributory old-age pension.
  • 42.5% of women receive contributory pension and 44.5% of receive a non-contributory pension.
  • 53.7% of the labour force (aged 15+) are contributing to pension schemes and accumulating rights to a contributory pension.
Population ageing is affecting all regions of the world and requires a paradigm shift for social security in terms of pensions, health care and long-term care.

Key messages

Global

  • Ageing is a global phenomenon: no region is exempt. At a continental level, some subregions are currently at an earlier stage than others as regards this general demographic trend, but they will have less time to adjust.

 

  • The general trend towards an ageing society will be marked by unprecedented human change. In terms of pensions, it will result in pension system reforms. For all pension systems, there will be five factors to consider that will influence expenditure: the number of elderly beneficiaries, the level and the duration of payments, revenues, the number of persons available to finance these needs and the duration of contribution periods.

 

  • As regards health, the ageing population will lead to a paradigm shift. There will be an increase in age-related chronic illness. Issues such as care needs or the loss of autonomy of older people will become more salient. These two trends will require a significant increase in both budgets and the levels of assistance provided.

 

  • For all countries, the formalization and extension of social security coverage must be priorities in the context of ageing societies and the needs arising as a result. There is a need for formalization of the economy in broad terms, in order to achieve the level of institutional maturity required to respond effectively to this phenomenon. Support for elderly people should also be placed on a more formal footing, in particular support for activities of daily living in those countries where this transition is most advanced.

Regional

  • Although it is by far the youngest continent, the transition in Africa is already underway both in the north and in the south. The traditional role and status of older people within the family is not compatible with this ongoing socioeconomic change. An extension of social security coverage and the associated formalization of the economy are prerequisites to prevent hardship in later life, in a context marked by rural depopulation and the relative poverty of geographically remote areas.

 

  • Asia presents a very divided picture. On the one hand, there are advanced, but ageing, economies, in particular in East Asia. But there are also regions in South Asia that continue to be characterized by younger populations and more informal economies. For the ageing economies, the development of dedicated services for older people creates a demand for a well-trained, formalized workforce that could be recruited from areas with younger populations. The same set of issues, and similar solutions, might apply in Europe, where there are very few exceptions to the pervasive trend of an ageing population.

 

  • In the Americas there are also two demographic profiles and two different institutional models, drawing on different approaches. In the north and the far south, the approach to ageing populations has been influenced by economic liberalism. This has led to the increased prevalence of pension savings. However, in the rest of the continent and in the Caribbean, where the population is younger, the approach has been based on universal protection – often minimal and at a flat rate. Ultimately, the inadequacy of pension payments from pension funds has placed a burden on the public purse (requiring, first, an increase in fiscal expenditure  and, subsequently, to the widespread recourse to tax-funded universal minimum incomes), and has prompted repeated pension reforms in Latin America.

Resources

De Bienassis, K., Llena-Nozal A.; Klazinga, N. 2020. The economics of patient safety part III: Long-term care: Valuing safety for the long haul (OECD Health Working Papers, No. 121). Paris, Organisation for Economic Co-operation and Development.

ILO. 2021. World social protection report, 2020–2022: Social protection at the crossroads – in pursuit of a better future. Geneva, International Labour Office.

ISSA; ILO. 2022. Guidelines on actuarial work for social security. Geneva, International Social Security Association.

ILO; ISSA; UNDESA. 2021. Governance of social protection systems: a learning journey – Module #1: Coordination. Geneva, International Labour Office.

ISSA. 2019a. Technical report on ageing-in-place and long-term care (Technical Commission on Medical Care and Sickness Insurance). Geneva, International Social Security Association.

ISSA. 2019b. ISSA Guidelines on contribution collection and compliance (Revised and updated version). Geneva, International Social Security Association.

ISSA. 2019c. ISSA Guidelines on good governance. Geneva, International Social Security Association.

ISSA. 2019d. ISSA Guidelines on service quality (Revised edition). Geneva, International Social Security Association.

ISSA. 2021a. Long-term care: global efforts and international attention from the health perspective. Geneva, International Social Security Association.

ISSA. 2021b. Long-term care in ageing societies: issues and strategies (Analysis). Geneva, International Social Security Association.

ISSA. 2022a. Presentations, documents & videos from the 20th ISSA International Conference of Social Security Actuaries, Statisticians and Investment Specialists. Geneva, International Social Security Association

ISSA. 2022b. ISSA Guidelines on administrative solutions for extending coverage (Revised edition). Geneva, International Social Security Association.

ISSA. 2022c. ISSA Guidelines on communication by social security administrations (Revised edition). Geneva, International Social Security Association.

Muir, T. 2017. Measuring social protection for long-term care (OECD Health Working Papers, No. 93). Paris, Organisation for Economic Co-operation and Development.

Ortiz, I.; Schmitt V.; De L. (eds). 2019. 100 years of social protection: the road to universal social protection systems and floors: Volume I: 50 country cases. Geneva, International Labour Office.

UNDESA. 2019. World population ageing 2019: highlightsNew York, NY, United Nations – Department of Economic and Social Affairs.

WHO. 2015. World report on ageing and health. Geneva, World Health Organization.

WHO. 2021. Framework for countries to achieve an integrated continuum of long-term care. Geneva. World Health Organization.

Meeting the needs of an ageing population

Introduction

Population ageing is a global phenomenon, a fact recognized in April 2002 by the United Nations at the Second World Assembly on Ageing, which took place in Madrid. There are no exceptions to the general trend: the common assumption that some continents (such as Asia or Europe) are “older” than others (such as the Americas or Africa) does not reflect the reality. Every region is affected by ageing, although some subregions (East Asia, Western Europe, North Africa, Southern Africa and the Southern Cone) have reached a more advanced stage than in others (sub-Saharan Africa, Central America, South East Asia and the Pacific). In the latter regions, the ageing of the population is less advanced, but will become more pronounced.

This issue was therefore included in the United Nations Development Agenda. It calls for age-inclusive societies and requires each Member State to take into account the cross-cutting impact of ageing as they work towards the United Nations Sustainable Development Goals. The fight against poverty in old age, age equality and health protection in later life are priority objectives (UN, 2020).
Regardless of the stage of population ageing reached, this development will place an increasing cost burden on social security systems, whatever their institutional backdrop and resulting organizational structure. Concerns arise in connection with longevity risk, such as standards of living among pensioners or the fight against poverty in later old age. Beyond this, however, the ageing population will also entail a shift in population morbidity profiles, requiring adaptation at an institutional level. This adaptation will be easier to achieve if it can build on an existing foundation of resilient institutions. There is a prerequisite for this resilience: the formalization of the economy.
Population ageing is affecting all regions of the world and requires a paradigm shift for social security in terms of pensions, health care and long-term care.

Facts & trends

Demographic snapshot and provision of long‑term care

Figure 1. Growth of population aged 65-80+, 2020-2050, in % of the total population

Source: UNDESA (2022).
  • Between 2015 and 2050, the proportion of the world’s population over 60 years will nearly double from 12% to 22%. (WHO, 2021a)
  • The number of persons aged 80 years or older is expected to triple between 2020 and 2050 to reach 426 million. (WHO, 2021a)
  • Projected declining fertility rates from 2.42 in 2020 to 2.18 in 2050 are contributing to an increase in the share of the population aged 65 or older. (UNDESA, 2022)

Demographic snapshot and provision of long‑term care 2

Figure 2. Demographic old-age dependency ratio 2020, global estimates

Source: UNDESA (2022).
  • There are at least 142 million older persons (aged 60+) worldwide (14% of the global older population living in 42 countries) who lack the functional ability to meet daily needs. (WHO, 2021b)
  • Globally, the availability of formal long-term care services is low: 48% of older persons are not covered by any type of formal provision of services. (WHO, 2021c)
  • 49% of countries reported to have a long-term care policy or strategy in 2020. (WHO, 2021c)

Effective and legal old-age pension coverage of the working-age population

Figure 3. Legal old-age pension coverage of the working-age population (%)

Source: ILO (2021)
  • Globally, 49.6% of the population above the statutory pensionable age receive a contributory old-age pension; 44.5% receive a non-contributory old-age pension.
  • 42.5% of women receive contributory pension and 44.5% of receive a non-contributory pension.
  • 53.7% of the labour force (aged 15+) are contributing to pension schemes and accumulating rights to a contributory pension.

Main developments

Key messages

Global

  • Ageing is a global phenomenon: no region is exempt. At a continental level, some subregions are currently at an earlier stage than others as regards this general demographic trend, but they will have less time to adjust.

 

  • The general trend towards an ageing society will be marked by unprecedented human change. In terms of pensions, it will result in pension system reforms. For all pension systems, there will be five factors to consider that will influence expenditure: the number of elderly beneficiaries, the level and the duration of payments, revenues, the number of persons available to finance these needs and the duration of contribution periods.

 

  • As regards health, the ageing population will lead to a paradigm shift. There will be an increase in age-related chronic illness. Issues such as care needs or the loss of autonomy of older people will become more salient. These two trends will require a significant increase in both budgets and the levels of assistance provided.

 

  • For all countries, the formalization and extension of social security coverage must be priorities in the context of ageing societies and the needs arising as a result. There is a need for formalization of the economy in broad terms, in order to achieve the level of institutional maturity required to respond effectively to this phenomenon. Support for elderly people should also be placed on a more formal footing, in particular support for activities of daily living in those countries where this transition is most advanced.

Regional

  • Although it is by far the youngest continent, the transition in Africa is already underway both in the north and in the south. The traditional role and status of older people within the family is not compatible with this ongoing socioeconomic change. An extension of social security coverage and the associated formalization of the economy are prerequisites to prevent hardship in later life, in a context marked by rural depopulation and the relative poverty of geographically remote areas.

 

  • Asia presents a very divided picture. On the one hand, there are advanced, but ageing, economies, in particular in East Asia. But there are also regions in South Asia that continue to be characterized by younger populations and more informal economies. For the ageing economies, the development of dedicated services for older people creates a demand for a well-trained, formalized workforce that could be recruited from areas with younger populations. The same set of issues, and similar solutions, might apply in Europe, where there are very few exceptions to the pervasive trend of an ageing population.

 

  • In the Americas there are also two demographic profiles and two different institutional models, drawing on different approaches. In the north and the far south, the approach to ageing populations has been influenced by economic liberalism. This has led to the increased prevalence of pension savings. However, in the rest of the continent and in the Caribbean, where the population is younger, the approach has been based on universal protection – often minimal and at a flat rate. Ultimately, the inadequacy of pension payments from pension funds has placed a burden on the public purse (requiring, first, an increase in fiscal expenditure  and, subsequently, to the widespread recourse to tax-funded universal minimum incomes), and has prompted repeated pension reforms in Latin America.

Read more about Ageing for specific regions

Resources

De Bienassis, K., Llena-Nozal A.; Klazinga, N. 2020. The economics of patient safety part III: Long-term care: Valuing safety for the long haul (OECD Health Working Papers, No. 121). Paris, Organisation for Economic Co-operation and Development.

ILO. 2021. World social protection report, 2020–2022: Social protection at the crossroads – in pursuit of a better future. Geneva, International Labour Office.

ISSA; ILO. 2022. Guidelines on actuarial work for social security. Geneva, International Social Security Association.

ILO; ISSA; UNDESA. 2021. Governance of social protection systems: a learning journey – Module #1: Coordination. Geneva, International Labour Office.

ISSA. 2019a. Technical report on ageing-in-place and long-term care (Technical Commission on Medical Care and Sickness Insurance). Geneva, International Social Security Association.

ISSA. 2019b. ISSA Guidelines on contribution collection and compliance (Revised and updated version). Geneva, International Social Security Association.

ISSA. 2019c. ISSA Guidelines on good governance. Geneva, International Social Security Association.

ISSA. 2019d. ISSA Guidelines on service quality (Revised edition). Geneva, International Social Security Association.

ISSA. 2021a. Long-term care: global efforts and international attention from the health perspective. Geneva, International Social Security Association.

ISSA. 2021b. Long-term care in ageing societies: issues and strategies (Analysis). Geneva, International Social Security Association.

ISSA. 2022a. Presentations, documents & videos from the 20th ISSA International Conference of Social Security Actuaries, Statisticians and Investment Specialists. Geneva, International Social Security Association

ISSA. 2022b. ISSA Guidelines on administrative solutions for extending coverage (Revised edition). Geneva, International Social Security Association.

ISSA. 2022c. ISSA Guidelines on communication by social security administrations (Revised edition). Geneva, International Social Security Association.

Muir, T. 2017. Measuring social protection for long-term care (OECD Health Working Papers, No. 93). Paris, Organisation for Economic Co-operation and Development.

Ortiz, I.; Schmitt V.; De L. (eds). 2019. 100 years of social protection: the road to universal social protection systems and floors: Volume I: 50 country cases. Geneva, International Labour Office.

UNDESA. 2019. World population ageing 2019: highlightsNew York, NY, United Nations – Department of Economic and Social Affairs.

WHO. 2015. World report on ageing and health. Geneva, World Health Organization.

WHO. 2021. Framework for countries to achieve an integrated continuum of long-term care. Geneva. World Health Organization.

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