GLOBAL - People are gaining on average six hours per day in life expectancy ,which dramatically highlights the need for pensions solutions, delegates were told at an IPE Awards Seminar keynote speech on living with longevity.
As the ratio of non-workers to workers increases with growing longevity, the sharp improvements in life expectancy also threaten workers with an extra heavy tax burden.
In Germany, for example, the non-worker to worker ratio is projected to rise from 1.27 (or five non-workers per four workers) in 2005 to 1.47 (or three non-workers per two workers) in 2025 if working patterns remain the same.
To make up for this 16% increase in the non-worker burden, workers would be required to pay an additional 16% in taxes, according to James Vaupel, director of Germany’s Max-Planck Institute for Demographic Research.
To avoid such a big loss to the economy, the German government is working on a new work-life balance reform, essentially encouraging older workers to work more and reduce work among younger people to enable them to have more time for further education and their families.
Vaupel’s prospects for the 21st century are that:
populations probably live 2.5 years longer per decade they live healthier at any specific age they can postpone disability to later ages there is a real need for geriatric medicine and they consequently have to postpone retirement and work more years of their lives but fewer hours per year
The trend of a linear rise in life expectancy since 1840 is mirrored in almost all countries but most notably in Japan where 65-year old women can now expect to live until over 86 with no sign of any deceleration.
Even countries where the rise in longevity has stagnated, such as in Denmark, the Netherlands and the US, life expectancy is set to rise again in the future, says Vaupel, as the causes of the temporary halt - mainly the rise in cigarette smoking - have already started to decline.
Vaupel gave his keynote speech at IPE’s ‘Future shape of pensions: how to maintain our long-term perspective’ seminar in Dublin ahead of the European Pension Fund Awards held earlier this week.