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FIAP > Boletín – Otras Publicaciones > Preventing Aging Unequally – OECD – October 2017
18 December, 2017

Preventing Aging Unequally – OECD – October 2017

This report examines how the two global population aging megatrends and increasing inequality have developed and interacted within and across generations. Taking a life-cycle perspective, the report shows how inequalities in education, health, employment and income combine, resulting in large differences in lifetime earnings between different groups. It suggests a policy agenda for preventing, mitigating and dealing with life-long inequalities, using the good practices of the OECD countries and emerging economies to advantage.

According to the report, the younger generations will face greater inequality risks in old age than current retirees. Furthermore, with the reduction in family sizes, greater inequality in the working environment, and reforms that have reduced pensions, some groups face a high risk of poverty.

According to the report, there were only 20 people aged 65 or more for every 100 of working age, on average, in OECD countries in 1980; by 2015, this figure had increased to 28 and by 2050 it is expected to almost double to 53. Many of the OECD and emerging economies are aging much more quickly. At the same time, inequalities have been increasing from one generation to another. Inequality will be much higher among those who are now beginning their working lives than the inequality existing among the elderly today.

Future senior citizens will experience more varying situations: people will live longer, but there will be more unemployed people at some point of their working lives, and they will receive low wages, while others will have enjoyed stable, higher income trajectories.

Inequalities in education, health, employment and income begin to accrue from an early age, according to the report. On average in all countries, a 25-year-old college-educated man can expect to live almost 8 years longer than his peers with a lower level of education; the difference is 4.6 years for women. People of all ages in poor health work less and earn less. In the course of a working life, poor health reduces the lifelong profits of men with a low level of education by 33%, whereas the loss is only 17% for men with a high level of education.

Those with low incomes tend to have lower life expectancy than those earning good wages, and this further reduces their total pensions. Raising the retirement age tends to increase inequality in total pensions between low and high-income individuals, but the impact is small. However, gender inequality will probably continue to be important in old age: the annual pension payments to people over 65 are 27% lower for women, on average, and poverty in old age is much higher among women than among men.

The problems of inequality in old age are even more acute in emerging economies, and several countries, including Brazil, China and India, are facing rapid aging at a relatively early stage of development, with broader health inequalities than the OECD countries, and a less effective social safety net.

To address these problems, the OECD says that countries must adopt a life cycle approach focusing on three areas:

  1. Prevent inequality before it accumulates over time. The measures should include providing good quality child care and early childhood education, helping disadvantaged young people to find work, and increasing health care expenditure in prevention, to reach out to groups at risk.
  2. Mitigating inequalities. Health services should switch to a more patient-centered approach and employment services should boost efforts to help the unemployed to find work and eliminate barriers to retaining and recruiting older workers.
  3. Address inequalities at more advanced ages. Pension system reforms cannot eliminate inequality among the elderly, but they can mitigate it. Well-designed social or non-contributory pensions can limit the impact of socio-economic differences in life expectancy on pensions.
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