Older population in an aging world

T. Rusiripala President People's Bank Pensioners Association

Preventive health and financial preparedness should be the individual concern while pension reforms to ensure sustainable old age support is a matter to be dealt with by authorities at the macro level as country responsibilities

In 2009 more than 500 million people worldwide are 65 years and older. This figure is projected to increase to 1 billion by 2030, making 1in every 8 of the earth's population to be of that age group. We are aging - not only as individuals but as a world! In terms of World population density Sri Lanka occupies the 54th place. In Sri Lanka according to the 2008 mid year statistics out of a total population of21 + millions, 3.5 million were older than 55 years.1.76 million were over 65 years.

Population aging is a sign of victory that represents global advancements in Social, Medical, Economic and disease defeating by the human kind. But it also presents several challenges, to all countries. The number of very old ie.85 years and over is growing very fast in several countries. For the world the need for reform becomes more demanding as the population aging accelerates fast, while the Cost of Waiting to address the issues will be socially and financially overwhelming.

Global scenario

We have to look at aging as a success story with a high potential for creating opportunities for economic expansion and cross border collaboration which however is yet to be explored.

Today people are living healthier and longer lives. Humans have achieved many triumphs over several factors that constrained human life expectancy for many thousand years . Both in developing and developed countries life expectancy continues to increase. Probably for the rest of human history people of 65 and over will outnumber children under 5.

But the sustained population growth creates a need to recognize demographic realities and formulate policies without waiting. Preparing for old age should be addressed both on an individual basis as well as at the society level.

Preventive health and financial preparedness should be the individual concern while pension reforms to ensure sustainable old age support is a matter to be dealt with by authorities at the macro level as country responsibilities.

Many individuals approach older age with hardly any savings. By following a farsighted perspective and beginning to save early in life one can avoid the financial cost of waiting. Eg. if a person begins to save at 40 years he accumulates a certain amount at the age of 60, but certainly if he starts at 30 amount that could be saved is much higher. Even at the National level the same argument holds regarding the cost of waiting, only a little more complex.] this para may be deleted if the article is too long!

It is noteworthy that while the global population is aging in an unprecedented pace some countries are experiencing a simultaneous population decline. .In about 20 countries the population is projected to shrink significantly in the coming decade. This is primarily due to low fertility rates in those countries. The number of births per woman is below the rate needed to replenish a population.

Certain extremely awkward situations arise as a result, such as the demand for health care services outweighing the need to build more schools, decline in the number of young workers and increase in the non- working population etc.

Economic expansion

All this will lead to hamper economic expansion and will have many implications with regard to social funding programs and policy formulations on international migrations. Migration seems to be an effective solution Labour is considered less mobile than capital.

But migration should partially offset the effects of population aging. Some of the present trends confirm this. Currently 22 percent of physicians and 12 percent of Nurses in the US are foreigners. The foreign- born work forces are growing in OECD countries. The global patterns of interplay between aging and migration will rapidly change in the next decade.

As people live longer and families have fewer children, there will be significant transformations in the family structures. This will have serious implications in terms of providing care to older people. Today most older people have children and grand children although the number of siblings in families will be less due to low fertility. Because of this trend people will have less familial care and support as they age. With increasing life expectancy the odds of different generations co-existing within a family also increase.]{this para may be deleted if the space is limited

Life in retirement strain the pension and health systems in existence .Aging populations generate new economic challenges affecting social security targets, labor supply, trade and savings globally.

Escalating pension expenditures due to increasing old age population makes it necessary to evaluate the sustainability of the pension/social security schemes. Eight countries already have chosen to make occupational pension plans mandatory. Sixteen countries mainly in the Asian Region have Provident Fund Schemes as compulsory savings programs managed by the governments. Other countries have introduced individual accounts systems as part of a defined contribution plan.

The trend towards defined contribution plans is more evident than defined benefit plans. In the case of the latter employers guarantee specified future pensions, whereas the defined contribution plans are less effective in providing adequate income security for the duration of retirement due to the shifting of the risk and decision making towards the employee.

Sri Lankan situation

The Sri Lanka situation has to be viewed in the context of this Global Scenario. The largest section of the Pensioners is Public Servants. They depend entirely on the sympathies of the governments in power to obtain relief against inflation and increasing cost of living. They live in hope from one budget to another budget to achieve the long desired gratification. They have a host of unresolved outstanding issues connected to their pension payments. Government after government have kept these matters pending causing so much of traumatic pains to a large section of the senior citizens in the country who should instead be treated more humanely. The span of life ahead for them is very short and if the expectations are not materialized with the least delay they may not live to enjoy these benefits. Government should consider adopting a policy of adjusting the pensions with every salary revision granted.

This will greatly mitigate the fast widening gaps and disparities between the pensions and salaries. If the existing anomalies too are addressed in the same priority there will be no cause for cry or complain. The minds of the elders and seniors of the society are best kept in such a state of tranquillity.

Private sector pension schemes

The private sector pension schemes that were introduced several decades ago too need to be evaluated in the current context. Many disparities have since occurred in these schemes. Due to the Salary structures changing drastically, the pensions older retirees receive have become so small compared to the recent pensioners. In certain pension plans there exists extremely alarming differences such as the lowest being 12000/=and the highest Rs.300,000/= per month.

The famous Thalgodapitiya Award {DC.685 Spl. Of 29 Nov 1956} often sited as a land mark judicial pronouncement in the history of private Superannuation Schemes in this country, the learned Judge observed:

'the target should be that the emoluments must be sufficient to enable a man in receipt thereof to maintain himself and his family in a reasonable standard of comfort in relation to the nature of his occupation and the class from which he is drawn....... "

In a conservative evaluation of any pension scheme under this principle, there is no need for excessively high generosities as well as there is no moral justification for some to be so disadvantageously placed under the same scheme.

Are pensioners so helpless?

According to statistical data one third of the voting population in this country are people over 55 years of age. Pensioners and retired work force constitute a significant section of this sector. In many countries, senior citizen forums are regarded as active contributors to social and political activities.

In the European Commission, senior citizens comprise of a mandatory group the European Parliament has to consult before any legislative or constitutional changes are effected. These examples are worth emulating both in the context of elder's needs as well as country's needs. Senior citizens, as a sector, deserve a special place in the decision making process in this country too.

The plea submitted by the Federation of State Banks Pensioners for consideration by the government, addressed to .the President, asking for the appointment of a permanent commission to address the issues confronting the pensioners will certainly be a helpful measure. Such a body will immensely contribute to the initiation of meaningful steps to resolve problems.(the section in italics may be dropped if space is a problem).

Let us all dedicate to find speedy solutions to the Pensioners problems.