Philippines pensions face up to default threat | Taiwan turns back the sands of time
ASIA FACES A serious demographic challenge. According to the UN, by 2050 approximately 750 million people in key Asian economies will be older than 65.
In most Asian countries, the age dependency ratio, the ratio of those over 65 to those of working age (15 to 65), is already high and forecast to increase rapidly over the next 20 years. Conversely, replacement ratios in the region, the amount of retirement benefit to pre-retirement income, are generally too low, just at the time when they should be rising. Coverage ratios, a measure of the proportion of the population that benefits form state pension schemes, are also generally low.
Asia’s pensions crisis is especially acute in Japan, Korea, Hong Kong and Singapore, but all of the region’s main economies face challenges in reforming their pensions systems. Fortunately, governments now recognize the problems they face and most are restructuring their pensions systems, in different ways and at varying rates.
Whatever the nature and speed of the reforms, the effects on Asia’s domestic capital markets and the global fund management and banking industries will be profound.