Pension questions for Asia

A falling birth rate and more senior citizens add up to a big problem for Asia's working population. According to Gavin Jones, a professor at the Asia Research Institute in the National University of Singapore. He said at the launch of a book he co-edited: “Age symbolises success in "the elongation of life" and "controlling what were previously overly high fertility rates." The book: ”The Impact of Ageing: A Common Challenge for Europe and Asia,” was launched in Kuala Lumpur recently.

Asia will have to finance health care for the "silver generation". "There are real issues relating to ageing and all of them have to do with the very end of life," said Jones.

He pointed out that typically half of the medical costs involved in a person's life occurs in the last two years of his or her life." With rising health care costs, governments will have to make greater allocations for health services. The long-term care movement is emerging as the population ages. Assisted-care and senior living services and facilities are increasingly available but remain largely unaffordable to the old poor.

Although more female participation in the work force eases labour shortages, it also lowers birth rates. Women are less likely to get married and have children. They are also unavailable to look after the dependent elderly.

Although longer life spans and falling birth rates are also happening in the West, unlike developed countries, in developing economies like Malaysia and others in Asia, have not yet transited to a mature market economy, according to Yeoh Yeok Kim, assistant representative of the United Nations Population Fund (UNFPA).

Ageing could contribute to a rising dependency ratio -- the ratio of the economically dependent younger (below 15 years) and older (65 years and over) populations to the working population (15-64 years). This could depress national savings in the long term. As a result, the country could face shortages of savings and investment funds.

One solution could be to implement tax deductions for medical care for parents. Others include pension investment schemes where retirees are given the option of monthly withdrawals instead of a lump sum payment, to ensure that their capital does not expire before they do. Ultimately, people will have to spend more time contributing to pensions and less using them.