Mass ageing poses a challenge we’ve never faced before

Source: This post has been created based on the article “Mass ageing poses a challenge we’ve never faced before” published in the Live Mint on 11^th October 2023.

UPSC Syllabus Topic: GS Paper 2 Social Justice — Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes.

News: This article discusses the emerging trends and the consequent challenges of the demographic trend of ageing. It also highlights the trends in India and their possible solutions.

Ageing is becoming the dominant global demographic trend.

In 2022, there were nearly 800 million people aged 65+ years comprising 10% of the world’s population. This is likely to increase to 16% by 2050 and nearly 25% by the end of the century.

What are the reasons for this trend?

Rapid and accelerating ageing is taking place on account of declining fertility and increasing longevity.

Global life expectancy has more than doubled over the last century. At the same time, fertility has dropped in every country. For instance, India’s fertility rate has more than halved to 2.0 in just 4 decades.

What are the opportunities associated with this change?

Experience of the elderly with a wide range of functional capabilities can be utilized. If done systematically and creatively, they can be converted into an asset.

What are the challenges associated with this change?

Financial burden in low and middle-income countries due to the changing age-distribution, coupled with climate change.

The biggest challenges are related to income security, healthcare and ensuring lives of dignity for the elderly.

What does the situation in India look like?

India has the 2^nd largest population of elderly at nearly 100 million. By the end of this century, this will rise to 330 million.

This will lead to issues of elder care, health systems and income and pension security.

Other important issues are the extension of retirement age, increasing employer contribution to pensions, and providing incentives for household savings and elder care, while at the same time focusing on providing employment to youth.

Another complication is a stark difference between states in demographic structure.
States with higher GSDP per capita, like Maharashtra and Tamil Nadu, have fertility rates well below 2.0, while Uttar Pradesh has a fertility rate of 2.4 and Bihar of 3.0.

Additionally, women outlive men by about 3-4 years on average, which further leads to the income security problem.

Defined benefit pensions (DB, where benefits of income and healthcare are assured) have given way to Defined Contribution plans (DC, where tax-advantaged contributions are made). DB plans are unaffordable to employers and DC plans are generally insufficient to cover the cost of increases in lifespan. The net result is a household deficit for elder care.

What can be the solutions to these challenges?

Firstly, increasing the productive lifespan of people by raising the retirement age.

Secondly, healthcare and wellness will need to be strengthened including early-motherhood prevention and mitigation of lifestyle diseases. As school-going children decrease, schools will need to be closed and hospitals built instead.

Thirdly, a ‘calorie’ mindset should give way to a ‘balanced nutrition’ mindset to increase health spans and lessen the financial burden.

Lastly, an increase in permissible contributions to DC plans will be required, to increase the magnitude of savings.