Aging, Fiscal Sustainability and Adequacy of Social Security Systems
By Rafal Chomik, John Piggott, and Sophie Yan
Population ageing poses unique challenges for social security systems. Developed countries, with well-established structures, will face increasing age-related spending. They will require further reforms that balance spending cuts against core promises across generations. Most emerging economies, on the other hand, lack comprehensive social security yet are ageing rapidly. They must establish comprehensive retirement income support structures, universal health services, and publicly supported long term care in a rapidly changing macro-demographic environment.
This policy brief, while bringing a broad perspective to these challenges, focuses its policy analysis on retirement income, the first frontier in reforming social security systems in an ageing world. In line with the UN’s Sustainable Development Goals, our key policy recommendation is that future social security reforms be re-directed towards a greater emphasis on non-contributory pension programs that can provide a much-needed safety net for older people. These will be the most important structures to deliver the SDGs, especially for emerging economies.