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Gap Aging presentation

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The document discusses the challenges of global aging and introduces the Global Aging Preparedness Index (GAP Index) which assesses how prepared 20 countries are for issues related to aging populations. The GAP Index contains two subindices that measure fiscal sustainability and income adequacy for elderly populations up to 2040. Several data tables show projections for factors like public spending on the elderly as a percentage of GDP and growth in benefits for different countries.

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The Global Aging Preparedness Index GAPINDEX.CSIS.ORG Richard Jackson Center for Strategic and International Studies October 14, 2010 London
The world stands on the threshold of a stunning demographic transformation. It’s called global aging and it promises to affect every dimension of social and economic life. Perhaps most fatefully, it could call into question the ability of societies to maintain a decent standard of living for the old without imposing a crushing burden on the young.
Elderly (Aged 60 and Over), as a Percent of the Population in 2007 and 2040 India 7.2 15.6 Canada 18.6 31.5 Brazil 9.3 22.2 2007 France 21.6 31.6 Mexico 8.7 20.2 22.3 2040 Netherlands 32.2 Chile 12.2 22.2 25.0 Switzerland 32.7 US 17.2 17.9 25.4 Poland 33.5 China 11.3 21.9 27.9 Spain 37.9 UK 21.8 14.2 27.9 Korea 38.6 Australia 18.3 Germany 25.3 28.5 39.0 Russia 17.3 Italy 25.7 28.8 39.9 Sweden 24.0 Japan 28.1 29.6 43.3 0% 10% 20% 30% 40% 50% 0% 10% 20% 30% 40% 50%
The GAP Index GAP Index Countries  The GAP Index provides a unique new Australia quantitative assessment of the progress that Brazil countries worldwide are making in preparing Canada for the global aging challenge. Chile China France  The GAP Index projections extend through Germany the year 2040 in order to capture the full India impact of the demographic transformation Italy now sweeping the world. Japan Korea Mexico  The GAP Index covers twenty Netherlands countries, including both developed Poland economies and emerging markets. Russia Spain Sweden  The GAP Index consists of two subindices— Switzerland the fiscal sustainability index and the UK income adequacy index. US
GAP FISCAL SUSTAINABILITY INDEX PUBLIC BURDEN FISCAL ROOM CATEGORY BENEFIT DEPENDENCE CATEGORY Measures each country’s ability CATEGORY Measures the magnitude of to accommodate the growth in Measures how dependent the each country’s projected public its public old-age dependency elderly in each country are on old-age dependency burden burden by raising taxes, cutting public benefits—and thus how other spending, or borrowing politically difficult it may be to reduce those benefits BENEFIT BENEFIT TAX ROOM BUDGET BORROWING BENEFIT BENEFIT LEVEL GROWTH INDICATOR ROOM ROOM SHARE CUT INDICATOR INDICATOR Total INDICATOR INDICATOR INDICATOR INDICATOR Total public The growth in Government Total public The net public Total public The % of benefits to total public revenue in benefits to debt in 2040 as benefits as a elderly the elderly in benefits to 2040 as a % the elderly in a % of % of elderly households 2040 as a % the elderly of 2040 as a % GDP, assumin income: that would be of GDP from 2007 to GDP, assumi of g borrowing Average for pushed into 2040 as a % ng taxes are government pays for all 2007 to 2040 poverty by a of GDP raised to pay outlays, assu growth in 10% cut in for all growth ming cuts in public benefits public in public other benefits in benefits spending pay 2007 or the for all growth most recent in public available year benefits
Public Burden Category Benefit Level Indicator Total Public Benefits to the Elderly, as a Percent of GDP, 2007–2040 2007 2020 2030 2040 2007 2020 2030 2040 1 India 1.9 3.1 4.2 3.6 11 Switzerland 9.8 12.6 15.7 17.4 2 Mexico 2.4 3.2 3.9 5.1 12 UK 12.1 14.0 16.4 18.2 3 Chile 6.0 6.8 7.0 7.5 13 Japan 14.1 15.4 15.9 18.4 4 China 2.8 4.6 6.1 8.0 14 Sweden 15.7 16.6 18.1 19.2 5 Russia 5.8 7.5 8.7 10.2 15 Brazil 8.8 12.5 16.3 20.4 6 Poland 10.1 12.0 13.1 13.9 16 Germany 15.8 17.3 20.0 21.7 7 Korea 3.4 7.5 11.0 14.1 17 Netherlands 12.0 15.7 20.0 23.2 8 Canada 8.3 10.9 13.2 14.7 18 France 16.6 19.4 21.8 23.5 9 Australia 8.9 10.7 12.9 14.9 19 Italy 18.0 19.9 22.3 24.7 10 US 8.9 12.5 15.1 16.3 20 Spain 14.3 17.0 20.6 26.1 Note: Countries are ranked from best to worst according to the projection results for 2040.
Public Burden Category Benefit Growth Indicator Growth in Total Public Benefits to the Elderly from 2007 to 2040, as a Percent of GDP Chile 1.5 UK 6.1 India 1.6 Canada 6.4 Mexico 2.7 Italy 6.6 Sweden 3.5 France 6.8 Poland 3.8 US 7.4 Japan 4.3 Switzerland 7.6 Russia 4.4 Korea 10.7 China 5.2 Netherlands 11.2 Germany 5.9 Brazil 11.6 Australia 6.0 Spain 11.8 0% 5% 10% 15% 0% 5% 10% 15% Note: Countries are ranked from best to worst.
Fiscal Room Category Tax Room Indicator Total Government Revenue as a Percent of GDP, Assuming Taxes Are Raised to Pay for All Growth in Public Benefits, 2007–2040* 2007 2020 2030 2040 2007 2020 2030 2040 1 India 23.5 23.8 25.1 24.2 11 Korea 33.3 36.4 39.4 42.3 2 Mexico 22.6 22.9 23.4 24.4 12 Canada 40.7 41.5 43.5 45.0 3 Chile 29.5 26.4 26.4 26.9 13 UK 41.4 43.2 45.4 47.4 4 China 21.7 23.9 25.2 27.2 14 Brazil 34.8 39.6 43.5 47.4 5 Japan 33.5 33.7 34.0 36.2 15 Germany 43.9 43.9 45.8 47.5 6 Poland 40.3 39.4 39.8 40.4 16 Spain 41.1 42.4 45.6 50.3 7 Russia 40.0 38.0 38.9 40.5 17 Italy 46.4 47.7 49.5 51.4 8 Switzerland 33.9 35.9 38.8 40.6 18 Netherlands 45.7 47.8 51.5 54.7 9 Australia 35.7 36.6 38.7 40.6 19 France 49.6 52.4 54.6 56.3 10 US 34.0 37.6 40.3 41.7 20 Sweden 56.3 55.1 56.3 57.4 Note: Countries are ranked from best to worst according to the projection results for 2040. * The projections assume that, beginning in 2015, each country moves to a debt-neutral fiscal balance in its ―rest of government‖ budget.
Fiscal Room Category Budget Room Indicator Total Public Benefits to the Elderly as a Percent of Government Outlays in 2007 and 2040, Assuming Cuts in Other Spending Pay for All Growth in Public Benefits* India 6.7 US 24.2 12.5 44.1 Mexico 10.2 France 31.8 21.2 2007 44.9 Russia 17.3 Korea 12.0 27.9 2040 46.4 Chile 29.2 Germany 36.3 30.9 48.8 Poland 24.0 Netherlands 26.3 33.3 50.1 Sweden 29.9 Italy 37.7 35.5 51.0 Canada 21.2 Japan 39.2 36.3 51.0 China 12.6 Switzerland 30.4 36.3 52.6 UK 27.4 Brazil 23.8 41.2 55.6 Australia 26.0 Spain 36.4 42.5 64.0 0% 20% 40% 60% 80% 0% 20% 40% 60% 80% Note: Countries are ranked from best to worst according to the projection results for 2040. * The projections assume that, beginning in 2015, each country moves to a debt-neutral fiscal balance in its ―rest of government‖ budget.
Fiscal Room Category Borrowing Room Indicator Net Public Debt as a Percent of GDP, Assuming that Borrowing Pays for All Growth in Public Benefits, 2007–2040* 2007 2020 2030 2040 2007 2020 2030 2040 1 Chile -13.7 -14.5 -26.0 -31.1 11 India† 78.3 84.6 80.0 108.0 2 Sweden -25.0 -12.9 -14.1 17.8 12 Germany 42.9 54.7 56.7 127.2 3 Russia 0.0 1.6 -6.2 32.0 13 Japan 80.4 104.6 114.9 133.6 4 China 1.7 -1.5 -1.1 39.0 14 France 34.0 60.7 73.5 149.2 5 Mexico 31.4 44.4 43.0 66.8 15 UK 28.8 58.3 76.9 152.6 6 Poland 17.0 32.4 41.7 70.1 16 Italy 87.1 100.8 103.6 168.2 7 Australia -6.6 -1.1 1.3 73.9 17 Netherlands 28.0 36.5 41.3 169.1 8 Korea -35.8 -33.4 -36.8 87.4 18 Spain 18.7 41.6 49.2 175.1 9 Switzerland 11.0 9.3 5.8 98.9 19 Brazil 42.0 37.3 37.2 175.2 10 Canada 23.1 32.6 32.7 104.8 20 US 42.3 65.0 76.2 179.0 Note: Countries are ranked from best to worst according to the projection results for 2040. * The projections assume that, beginning in 2015, each country moves to a debt-neutral fiscal balance in its ―rest of government‖ budget. † Data for India refer to gross debt.
Benefit Dependence Category Benefit Share Indicator Public Benefits, as a Percent of Elderly Income, 2007–2040 Average Average 2007 2020 2030 2040 2007 2020 2030 2040 2007-40 2007-40 1 Mexico 25.3 26.6 26.0 26.5 27.1 11 Netherlands 49.6 48.9 49.6 51.6 49.8 2 Chile 34.8 30.6 26.9 26.3 30.8 12 China 48.0 52.5 51.0 54.8 52.1 3 India 27.4 32.2 34.5 26.5 31.6 13 Sweden 53.6 52.6 51.2 52.8 52.5 4 US 35.1 37.2 38.8 40.3 38.1 14 UK 51.5 52.5 52.2 55.1 52.8 5 Australia 43.1 39.5 40.3 41.2 40.5 15 Russia 57.4 55.9 57.4 54.9 56.5 6 Korea 29.9 40.9 44.0 45.9 41.3 16 Italy 60.5 58.1 55.8 55.9 57.6 7 Japan 46.9 44.5 42.2 42.6 43.9 17 Brazil 64.2 62.6 62.3 62.2 62.8 8 Canada 43.8 43.3 44.8 46.0 44.2 18 Spain 63.1 63.3 63.0 64.2 64.0 9 Switzerland 41.5 43.6 44.9 47.1 44.3 19 France 66.7 65.8 66.2 67.4 66.3 10 Germany 54.5 47.8 45.2 47.1 48.4 20 Poland 77.1 68.6 63.0 56.7 66.8 Note: Countries are ranked from best to worst according to the average for 2007 to 2040.
Benefit Dependence Category Benefit Cut Indicator Percent of Elderly Households That Would Be Pushed into Poverty Today by a 10 Percent Cut in Public Benefits* India 0.1 Italy 3.3 Mexico 0.6 Spain 4.1 Korea 0.7 Russia 4.6 Brazil 1.2 Sweden 5.1 China 1.2 Canada 5.3 Poland 2.2 UK 5.8 Chile 2.3 Australia 5.9 France 2.8 Germany 6.2 Japan 2.9 Switzerland 6.3 US 3.0 Netherlands 7.7 0% 2% 4% 6% 8% 10% 0% 2% 4% 6% 8% 10% Note: Countries are ranked from best to worst. * Data refer to various years between 1999 and 2007 and exclude public health benefits. Poor households are households with incomes beneath 50 percent of the median income for all households.
GAP INCOME ADEQUACY INDEX TOTAL INCOME INCOME VULNERABILITY FAMILY SUPPORT CATEGORY CATEGORY CATEGORY Measures the overall level of Measures income adequacy for Measures the strength of family and trend in the income of the ―middle class‖ elders and the support networks in each elderly relative to the nonelderly extent of elderly poverty in each country in each country country TOTAL TOTAL MEDIAN MEDIAN POVERTY FAMILY FAMILY INCOME INCOME INCOME INCOME LEVEL TIES SIZE LEVEL TREND LEVEL TREND INDICATOR INDICATOR INDICATOR INDICATOR INDICATOR INDICATOR INDICATOR The % of the The % of the The change The ratio of The % The ratio of The % elderly with elderly living in the average after- change in the median after- change in the incomes in households average tax elderly to ratio of tax elderly to ratio of beneath 50% with their number of nonelderly average after- nonelderly median after- of the median adult children surviving income in tax elderly to income in tax elderly to income for all in 2007 children of 2040, includin nonelderly 2040, excludi nonelderly persons in the elderly g public income from ng public income from 2007 or the from 2007 to health 2007 to health 2007 to most recent 2040 benefits 2040, includin benefits 2040, excludi available year g public ng public health health benefits benefits
Total Income Category Total Income Level Indicator Ratio of Average After-Tax Elderly to Nonelderly Income, Including Public Health Benefits, 2007–2040 2007 2020 2030 2040 2007 2020 2030 2040 1 Netherlands 1.29 1.37 1.52 1.72 11 Japan 1.19 1.12 1.11 1.12 2 US 1.43 1.54 1.62 1.67 12 Spain 1.00 1.06 1.05 1.06 3 Brazil 1.33 1.40 1.47 1.54 13 Italy 1.12 1.12 1.09 1.04 4 Germany 1.31 1.43 1.48 1.48 14 Switzerland 0.86 0.87 0.88 0.89 5 Chile 1.41 1.45 1.39 1.38 15 Mexico 0.94 0.88 0.85 0.82 6 Sweden 1.26 1.21 1.27 1.28 16 Korea 0.81 0.82 0.79 0.79 7 Australia 1.04 1.09 1.14 1.20 17 India 0.78 0.83 0.85 0.78 8 UK 1.05 1.08 1.14 1.19 18 Poland 0.75 0.70 0.76 0.74 9 Canada 1.13 1.11 1.11 1.14 19 Russia 0.68 0.65 0.65 0.71 10 France 1.16 1.09 1.10 1.13 20 China 0.52 0.53 0.50 0.51 Note: Countries are ranked from best to worst according to the projection results for 2040.
Total Income Category Total Income Trend Indicator Percent Change in the Ratio of Average After-Tax Elderly to Nonelderly Income from 2007 to 2040, Including Public Health Benefits Netherlands 32.9 Canada 0.7 US 17.0 India 0.5 Brazil 15.9 Poland -1.2 Australia 15.7 China -1.8 UK 13.4 Chile -2.2 Germany 13.0 Korea -2.9 Spain 5.7 France -3.1 Russia 3.9 Japan -5.6 Switzerland 3.8 Italy -6.6 Sweden 1.8 Mexico -12.7 -20% -10% 0% 10% 20% 30% 40% -20% -10% 0% 10% 20% 30% 40% Note: Countries are ranked from best to worst.
Income Vulnerability Category Median Income Level Indicator Ratio of Median After-Tax Elderly to Nonelderly Income, Excluding Public Health Benefits, 2007–2040* 2007 2020 2030 2040 2007 2020 2030 2040 1 Brazil 1.23 1.24 1.26 1.30 11 Italy 1.02 0.99 0.94 0.87 2 Netherlands 1.00 1.02 1.13 1.27 12 Canada 0.91 0.87 0.85 0.81 3 US 1.16 1.22 1.27 1.26 13 France 0.89 0.78 0.76 0.75 4 Germany 1.05 1.04 1.04 1.04 14 Poland 0.80 0.71 0.77 0.72 5 Chile 1.11 1.11 1.02 0.99 15 Switzerland 0.73 0.71 0.71 0.71 6 Japan 1.11 1.00 0.95 0.96 16 India 0.76 0.78 0.78 0.71 7 Sweden 0.94 0.92 0.94 0.94 17 Russia 0.64 0.59 0.58 0.61 8 Australia 0.89 0.85 0.88 0.93 18 Mexico 0.72 0.64 0.60 0.56 9 Spain 0.93 0.95 0.93 0.93 19 Korea 0.59 0.57 0.53 0.52 10 UK 0.88 0.88 0.90 0.93 20 China 0.39 0.38 0.35 0.34 Note: Countries are ranked from best to worst according to the projection results for 2040. * Data for both the elderly and nonelderly refer to the third quintile of the income distribution.
Income Vulnerability Category Median Income Trend Indicator Percent Change in the Ratio of Median After-Tax Elderly to Nonelderly Income from 2007 to 2040, Excluding Public Health Benefits* Netherlands 27.7 India -6.9 US 8.8 Poland -9.4 Brazil 5.5 Canada -10.2 UK 5.3 Chile -10.8 Australia 4.6 China -12.1 Spain 0.1 Korea -13.2 Sweden -0.8 Japan -14.2 Germany -0.9 Italy -14.8 Switzerland -2.5 France -15.9 Russia -5.5 Mexico -21.9 -35% -25% -15% -5% 5% 15% 25% 35% -35% -25% -15% -5% 5% 15% 25% 35% Note: Countries are ranked from best to worst. * Data for both the elderly and nonelderly refer to the third quintile of the income distribution.
Income Vulnerability Category Poverty Level Indicator Percent of the Elderly Living in Poverty Today* Netherlands 2.3 Chile 14.0 Poland 3.7 UK 15.4 Brazil 5.1 Australia 20.9 Sweden 5.5 India 21.8 France 8.1 Japan† 22.0 Canada 8.9 US 22.4 Germany 9.8 Spain 22.6 Italy 10.7 China 25.0 Switzerland 12.7 Mexico 25.5 Russia 13.8 Korea 36.2 0% 10% 20% 30% 40% 0% 10% 20% 30% 40% Note: Countries are ranked from best to worst. * Data refer to various years between 999 and 2007 and exclude public health benefits. Poor persons are persons with incomes beneath 50 percent of the median income for all persons. † Data for Japan refer to elderly aged 65 and older.
Family Support Category Family Ties Indicator Percent of the Elderly Living in Households with Their Adult Children in 2007 Italy 28.2 India 82.8 China 64.0 Canada 20.5 Mexico 57.3 US 16.9 Chile 54.5 Australia 16.2 Brazil 51.3 France 10.5 Japan 44.0 UK 9.7 Spain 42.4 Germany 8.4 Russia 39.9 Switzerland 6.4 Korea 37.2 Netherlands 5.3 Poland 31.6 Sweden 4.1 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% Note: Countries are ranked from best to worst.
Family Support Category Family Size Indicator Average Number of Surviving Children of the Elderly: 2007, 2040, and Change from 2007 to 2040 2007 2040 Change 2007 2040 Change 1 Sweden 2.1 2.0 -0.2 11 US 1.9 1.0 -1.0 2 Japan 2.0 1.5 -0.5 12 Australia 3.0 2.0 -1.0 3 Poland 2.6 2.0 -0.6 13 Netherlands 2.7 1.6 -1.1 4 UK 2.4 1.9 -0.6 14 Chile 3.5 2.4 -1.1 5 France 2.5 1.9 -0.6 15 Spain 2.7 1.4 -1.2 6 Germany 2.1 1.4 -0.7 16 Canada 3.2 1.7 -1.5 7 Switzerland 2.2 1.6 -0.7 17 China 3.5 2.0 -1.6 8 Russia 2.2 1.5 -0.7 18 Brazil 3.8 2.1 -1.7 9 India 3.5 2.6 -0.9 19 Korea 3.6 1.8 -1.8 10 Italy 2.3 1.4 -0.9 20 Mexico 5.0 2.6 -2.5 Note: Countries are ranked from best to worst according to the projected change from 2007 to 2040.
GAP Index Country Rankings Fiscal Sustainability Index Income Adequacy Index 1 India 1 Netherlands 2 Mexico 2 Brazil 3 Chile 3 US 4 China 4 Germany 5 Russia 5 UK 6 Poland 6 Australia 7 Australia 7 Sweden 8 Japan 8 Chile 9 Canada 9 Spain 10 Sweden 10 India 11 US 11 Canada 12 Korea 12 Japan 13 Switzerland 13 Poland 14 Germany 14 Switzerland 15 UK 15 Russia 16 Italy 16 France 17 France 17 Italy 18 Brazil 18 China 19 Netherlands 19 Korea 20 Spain 20 Mexico
GAP Index Reform Strategy Guide 1. Reduce 4. Increase 2. Reduce 5. Strengthen public 3. Extend funded 6. Increase 7. Increase health-care poverty pension work lives pension fertility rates immigration cost growth floors benefits savings Australia ★ ★★ ★ ★★ ★ Brazil ★★★ ★ ★ ★★ ★ ★ Canada ★ ★★ ★ ★★ ★ Chile ★ ★ ★ ★ ★ ★ China ★ ★★ ★★ ★★★ ★★ ★ France ★★★ ★★★ ★★★ ★★★ ★ ★ Germany ★★★ ★★ ★★ ★★ ★★★ ★★★ India* ★★ ★★ ★★ Italy ★★★ ★★ ★★★ ★★ ★ ★★★ ★★ Japan ★★★ ★★ ★★ ★★ ★★★ ★★★ Korea ★ ★ ★★★ ★★★ ★★★ ★★★ Mexico ★★ ★★★ ★ Netherlands ★★ ★★★ ★★ ★★ ★★ Poland ★★★ ★★ ★★ ★★★ ★★ Russia ★ ★★ ★★ ★ ★★★ ★ Spain ★★★ ★★ ★★★ ★★★ ★★ ★★★ ★★ Sweden ★★ ★★ ★ ★ ★ Switzerland ★ ★★ ★ ★ ★★★ ★ UK ★ ★★ ★★ ★ ★ ★ US ★ ★★★ ★ ★★ Reform Guide Key: No Stars = Not a Priority ★ = Low Priority ★★ = Significant Priority ★★★= High Priority
Annex
GAP Index Reform Strategy Guide No Stars = ★★ = ★= ★★★= Reform Guide Key Not a Significant Low Priority High Priority Priority Priority Strategy 1: Stars refer to projected current-deal public < 5% 5–10% 10–15% > 15% pension benefits to the elderly in 2040 as a % of GDP Strategy 2: Stars refer to projected public health < 4% 4–6% 6–8% > 8% benefits to the elderly in 2040 as a % of GDP Strategy 3: Stars refer to projected labor-force > 40% 30–40% 20–30% < 20% participation rate of the elderly aged 60–74 in 2040 Strategy 4: Stars refer to projected funded pension > 25% 15–25% 5–15% < 5% benefits as a % of elderly cash income in 2040 Strategy 5: Stars refer to percent of the elderly living in < 10% 10–20% 20–25% > 25% relative poverty today Strategy 6: Stars refer to projected total fertility rates > 2.0 1.8–2.0 1.5–1.8 < 1.5 for the period 2010-2040 moderate aging moderate aging & high & low Strategy 7: Stars refer to a composite measure of net low aging & high high aging & low immigration or immigration or immigration rates and the degree of population aging † immigration low aging & low high aging & immigration immigration high immigration * Following our priority categories for strategy seven, India, which has a low net immigration rate and low aging, should receive one star. But because its aging trend is so moderate compared with other Index countries, we make an exception and give it no stars. † Countries are divided into low-immigration countries (those below the mean for all Index countries) and high-immigration countries (those above the mean). They are also divided into three demographic groups according to the projected elderly share of the population in 2040: low (under 30%), moderate (30-35%), and high (over 35%).
Public Pension Benefits to the Elderly, as a Percent of GDP in 2007 and 2040: Current-Law versus Current-Deal Scenario* Current Current Current Current 2007 Law Deal* 2007 Law Deal* 2040 2040 2040 2040 Australia 4.6 6.5 8.0 Korea 1.4 7.5 4.8 Brazil 6.5 13.4 16.1 Mexico 0.8 0.8 2.1 Canada 3.9 5.6 7.7 Netherlands 5.3 10.7 10.0 Chile 4.2 3.3 9.4 Poland 7.3 8.4 15.8 China 2.2 5.5 6.0 Russia 3.5 5.6 6.6 France 11.2 12.8 19.0 Spain 8.0 14.7 17.4 Germany 10.0 11.9 18.5 Sweden 8.8 9.9 11.8 India 1.4 2.2 2.7 Switzerland 5.4 8.5 9.2 Italy 12.3 15.1 23.5 UK 5.8 7.9 8.1 Japan 9.1 10.1 17.4 US 4.1 6.1 6.8 * The current-deal scenario assumes that workers in the future on average retire at the same age they do today and that benefits replace the same share of wages.
Strategy 1: Reduce public pension benefits Public Pension Benefits to the Elderly, as a Percent of GDP in 2007 and 2040: Current-Law and Current-Deal Scenario* Current Current Current Current 2007 Law Deal* Stars 2007 Law Deal* Stars 2040 2040 2040 2040 Mexico 0.8 0.8 2.1 zero Chile 4.2 3.3 9.4 ★ India 1.4 2.2 2.7 zero Netherlands 5.3 10.7 10.0 ★★ Korea 1.4 7.5 4.8 ★ Sweden 8.8 9.9 11.8 ★★ China 2.2 5.5 6.0 ★ Poland 7.3 8.4 15.8 ★★★ Russia 3.5 5.6 6.6 ★ Brazil 6.5 13.4 16.1 ★★★ US 4.1 6.1 6.8 ★ Spain 8.0 14.7 17.4 ★★★ Canada 3.9 5.6 7.7 ★ Japan 9.1 10.1 17.4 ★★★ Australia 4.6 6.5 8.0 ★ Germany 10.0 11.9 18.5 ★★★ UK 5.8 7.9 8.1 ★ France 11.2 12.8 19.0 ★★★ Switzerland 5.4 8.5 9.2 ★ Italy 12.3 15.1 23.5 ★★★ * The current-deal scenario assumes that workers in the future on average retire at the same age they do today and that benefits replace the same share of wages. ★★ = No Stars = ★= ★★★= Reform Guide Key Significant Not a Priority Low Priority High Priority Priority Strategy 1: Stars refer to projected current-deal public < 5% 5–10% 10–15% > 15% pension benefits to the elderly in 2040 as a % of GDP
Strategy 2: Reduce health-care cost growth Public Health Benefits to the Elderly, as a Percent of GDP in 2007 and 2040 2007 2040 Stars 2007 2040 Stars India 0.2 0.9 zero Sweden 4.9 6.7 ★★ China 0.6 2.3 zero Spain 3.1 6.9 ★★ Mexico 0.7 2.8 zero Japan 4.0 7.0 ★★ Chile 1.1 3.3 zero Germany 4.1 7.3 ★★ Russia 1.5 3.5 zero UK 4.0 7.5 ★★ Poland 1.7 3.7 zero Switzerland 3.4 7.6 ★★ Korea 1.3 5.4 ★ Canada 3.6 7.7 ★★ Brazil 1.4 5.4 ★ Netherlands 3.9 8.5 ★★★ Australia 2.7 6.1 ★★ France 4.5 9.2 ★★★ Italy 3.4 6.7 ★★ US 4.2 9.3 ★★★ ★★ = No Stars = ★= ★★★= Reform Guide Key Significant Not a Priority Low Priority High Priority Priority Strategy 2: Stars refer to projected public health benefits to < 4% 4–6% 6–8% > 8% the elderly in 2040 as a % of GDP
Strategy 3: Extend work lives Labor-Force Participation Rate of the Elderly Aged 60–74 in 2007 and 2040 2007 2040 Stars 2007 2040 Stars Korea 45.6 44.6 zero UK 25.3 29.3 ★★ Japan 40.9 41.7 zero China 31.0 27.8 ★★ US 36.5 41.0 zero India 26.4 25.4 ★★ Mexico 41.1 40.1 zero Russia 18.3 24.2 ★★ Chile 33.8 36.6 ★ Germany 15.7 23.5 ★★ Brazil 36.7 36.6 ★ Netherlands 18.2 22.4 ★★ Australia 27.0 30.2 ★ Poland 11.8 21.8 ★★ Canada 27.8 30.2 ★ Spain 15.2 17.6 ★★★ Sweden 33.5 30.1 ★ Italy 10.5 13.9 ★★★ Switzerland 30.7 30.0 ★ France 7.9 8.5 ★★★ ★★ = No Stars = ★= ★★★= Reform Guide Key Significant Not a Priority Low Priority High Priority Priority Strategy 3: Stars refer to projected labor-force participation > 40% 30–40% 20–30% < 20% rate of the elderly aged 60–74 in 2040
Strategy 4: Increase funded pension savings Funded Pension Benefits as a Percent of Elderly Cash Income in 2007 and 2040 2007 2040 Stars 2007 2040 Stars Netherlands 24.4 28.8 zero Brazil 2.2 8.2 ★★ Canada 26.8 28.6 zero Russia 0.4 8.1 ★★ Australia 15.6 28.5 zero Mexico 2.3 7.5 ★★ Switzerland 20.9 25.0 zero Japan 7.3 7.1 ★★ US 19.6 21.1 ★ India 1.7 6.9 ★★ Sweden 9.3 18.8 ★ Germany 2.7 6.7 ★★ Chile 9.3 16.6 ★ Italy 2.9 5.9 ★★ UK 16.3 16.3 ★ Spain 2.9 4.6 ★★★ Poland 0.0 14.3 ★★ Korea 4.1 3.9 ★★★ China 0.0 9.7 ★★ France 1.3 1.8 ★★★ ★★ = No Stars = ★= ★★★= Reform Guide Key Significant Not a Priority Low Priority High Priority Priority Strategy 4: Stars refer to projected funded pension benefits as > 25% 15–25% 5–15% < 5% a % of elderly cash income in 2040
Strategy 5: Strengthen poverty floors Percent of the Elderly Living in Poverty Today* 2007 Stars 2007 Stars Netherlands 2.3 zero Chile 14.0 ★ Poland 3.7 zero UK 15.4 ★ Brazil 5.1 zero Australia 20.9 ★★ Sweden 5.5 zero India 21.8 ★★ France 8.1 zero Japan† 22.0 ★★ Canada 8.9 zero US 22.4 ★★ Germany 9.8 zero Spain 22.6 ★★ Italy 10.7 ★ China 25.0 ★★★ Switzerland 12.7 ★ Mexico 25.5 ★★★ Russia 13.8 ★ Korea 36.2 ★★★ * Data refer to various years between 1999 and 2007 and exclude public health benefits. Poor persons are persons with incomes beneath 50 percent of the median income for all persons. † Data for Japan refer to elderly aged 65 and older. ★★ = No Stars = ★= ★★★= Reform Guide Key Significant Not a Priority Low Priority High Priority Priority Strategy 5: Stars refer to percent of the elderly living in < 10% 10–20% 20–25% > 25% relative poverty today
Strategy 6: Increase fertility rates Total Fertility Rate: Average for 2010-2040 Average Average Stars Stars 2010-2040 2010-2040 India 2.2 zero Netherlands 1.7 ★★ Mexico 2.2 zero Canada 1.6 ★★ US 2.1 zero Switzerland 1.5 ★★★ Chile 1.9 ★ Spain 1.4 ★★★ Brazil 1.9 ★ Italy 1.4 ★★★ France 1.9 ★ Russia 1.4 ★★★ Sweden 1.9 ★ Germany 1.3 ★★★ UK 1.8 ★ Japan 1.3 ★★★ Australia 1.8 ★ Poland 1.3 ★★★ China 1.8 ★★ Korea 1.2 ★★★ ★★ = No Stars = ★= ★★★= Reform Guide Key Significant Not a Priority Low Priority High Priority Priority Strategy 6: Stars refer to projected total fertility rates for the > 2.0 1.8–2.0 1.5–1.8 < 1.5 period 2010-2040
Strategy 7: Increase immigration Aging Immigration Aging Immigration Stars Stars Group Group Group Group India Low Low zero Canada Med High ★ Australia Low High zero France Med High ★ Sweden Low High zero Switzerland Med High ★ UK Low High zero Netherlands Med Low ★★ US Low High zero Poland Med Low ★★ Brazil Low Low ★ Italy High High ★★ Chile Low Low ★ Spain High High ★★ China Low Low ★ Germany High Low ★★★ Mexico Low Low ★ Japan High Low ★★★ Russia Low Low ★ Korea High Low ★★★ ★★ = No Stars = ★= ★★★= Reform Guide Key Significant Not a Priority Low Priority High Priority Priority moderate aging moderate aging & low low aging & & high Strategy 7: Stars refer to a composite measure of net immigration or high aging & high immigration or immigration rates and the degree of population aging* high aging & low immigration immigration low aging & low high immigration immigration * Countries are divided into low-immigration countries (those below the mean for all Index countries) and high-immigration countries (those above the mean). They are also divided into three demographic groups according to the projected elderly share of the population in 2040: low (under 30%), moderate (30-35%), and high (over 35%).

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Gap Aging presentation

  • 1. The Global Aging Preparedness Index GAPINDEX.CSIS.ORG Richard Jackson Center for Strategic and International Studies October 14, 2010 London
  • 2. The world stands on the threshold of a stunning demographic transformation. It’s called global aging and it promises to affect every dimension of social and economic life. Perhaps most fatefully, it could call into question the ability of societies to maintain a decent standard of living for the old without imposing a crushing burden on the young.
  • 3. Elderly (Aged 60 and Over), as a Percent of the Population in 2007 and 2040 India 7.2 15.6 Canada 18.6 31.5 Brazil 9.3 22.2 2007 France 21.6 31.6 Mexico 8.7 20.2 22.3 2040 Netherlands 32.2 Chile 12.2 22.2 25.0 Switzerland 32.7 US 17.2 17.9 25.4 Poland 33.5 China 11.3 21.9 27.9 Spain 37.9 UK 21.8 14.2 27.9 Korea 38.6 Australia 18.3 Germany 25.3 28.5 39.0 Russia 17.3 Italy 25.7 28.8 39.9 Sweden 24.0 Japan 28.1 29.6 43.3 0% 10% 20% 30% 40% 50% 0% 10% 20% 30% 40% 50%
  • 4. The GAP Index GAP Index Countries  The GAP Index provides a unique new Australia quantitative assessment of the progress that Brazil countries worldwide are making in preparing Canada for the global aging challenge. Chile China France  The GAP Index projections extend through Germany the year 2040 in order to capture the full India impact of the demographic transformation Italy now sweeping the world. Japan Korea Mexico  The GAP Index covers twenty Netherlands countries, including both developed Poland economies and emerging markets. Russia Spain Sweden  The GAP Index consists of two subindices— Switzerland the fiscal sustainability index and the UK income adequacy index. US
  • 5. GAP FISCAL SUSTAINABILITY INDEX PUBLIC BURDEN FISCAL ROOM CATEGORY BENEFIT DEPENDENCE CATEGORY Measures each country’s ability CATEGORY Measures the magnitude of to accommodate the growth in Measures how dependent the each country’s projected public its public old-age dependency elderly in each country are on old-age dependency burden burden by raising taxes, cutting public benefits—and thus how other spending, or borrowing politically difficult it may be to reduce those benefits BENEFIT BENEFIT TAX ROOM BUDGET BORROWING BENEFIT BENEFIT LEVEL GROWTH INDICATOR ROOM ROOM SHARE CUT INDICATOR INDICATOR Total INDICATOR INDICATOR INDICATOR INDICATOR Total public The growth in Government Total public The net public Total public The % of benefits to total public revenue in benefits to debt in 2040 as benefits as a elderly the elderly in benefits to 2040 as a % the elderly in a % of % of elderly households 2040 as a % the elderly of 2040 as a % GDP, assumin income: that would be of GDP from 2007 to GDP, assumi of g borrowing Average for pushed into 2040 as a % ng taxes are government pays for all 2007 to 2040 poverty by a of GDP raised to pay outlays, assu growth in 10% cut in for all growth ming cuts in public benefits public in public other benefits in benefits spending pay 2007 or the for all growth most recent in public available year benefits
  • 6. Public Burden Category Benefit Level Indicator Total Public Benefits to the Elderly, as a Percent of GDP, 2007–2040 2007 2020 2030 2040 2007 2020 2030 2040 1 India 1.9 3.1 4.2 3.6 11 Switzerland 9.8 12.6 15.7 17.4 2 Mexico 2.4 3.2 3.9 5.1 12 UK 12.1 14.0 16.4 18.2 3 Chile 6.0 6.8 7.0 7.5 13 Japan 14.1 15.4 15.9 18.4 4 China 2.8 4.6 6.1 8.0 14 Sweden 15.7 16.6 18.1 19.2 5 Russia 5.8 7.5 8.7 10.2 15 Brazil 8.8 12.5 16.3 20.4 6 Poland 10.1 12.0 13.1 13.9 16 Germany 15.8 17.3 20.0 21.7 7 Korea 3.4 7.5 11.0 14.1 17 Netherlands 12.0 15.7 20.0 23.2 8 Canada 8.3 10.9 13.2 14.7 18 France 16.6 19.4 21.8 23.5 9 Australia 8.9 10.7 12.9 14.9 19 Italy 18.0 19.9 22.3 24.7 10 US 8.9 12.5 15.1 16.3 20 Spain 14.3 17.0 20.6 26.1 Note: Countries are ranked from best to worst according to the projection results for 2040.
  • 7. Public Burden Category Benefit Growth Indicator Growth in Total Public Benefits to the Elderly from 2007 to 2040, as a Percent of GDP Chile 1.5 UK 6.1 India 1.6 Canada 6.4 Mexico 2.7 Italy 6.6 Sweden 3.5 France 6.8 Poland 3.8 US 7.4 Japan 4.3 Switzerland 7.6 Russia 4.4 Korea 10.7 China 5.2 Netherlands 11.2 Germany 5.9 Brazil 11.6 Australia 6.0 Spain 11.8 0% 5% 10% 15% 0% 5% 10% 15% Note: Countries are ranked from best to worst.
  • 8. Fiscal Room Category Tax Room Indicator Total Government Revenue as a Percent of GDP, Assuming Taxes Are Raised to Pay for All Growth in Public Benefits, 2007–2040* 2007 2020 2030 2040 2007 2020 2030 2040 1 India 23.5 23.8 25.1 24.2 11 Korea 33.3 36.4 39.4 42.3 2 Mexico 22.6 22.9 23.4 24.4 12 Canada 40.7 41.5 43.5 45.0 3 Chile 29.5 26.4 26.4 26.9 13 UK 41.4 43.2 45.4 47.4 4 China 21.7 23.9 25.2 27.2 14 Brazil 34.8 39.6 43.5 47.4 5 Japan 33.5 33.7 34.0 36.2 15 Germany 43.9 43.9 45.8 47.5 6 Poland 40.3 39.4 39.8 40.4 16 Spain 41.1 42.4 45.6 50.3 7 Russia 40.0 38.0 38.9 40.5 17 Italy 46.4 47.7 49.5 51.4 8 Switzerland 33.9 35.9 38.8 40.6 18 Netherlands 45.7 47.8 51.5 54.7 9 Australia 35.7 36.6 38.7 40.6 19 France 49.6 52.4 54.6 56.3 10 US 34.0 37.6 40.3 41.7 20 Sweden 56.3 55.1 56.3 57.4 Note: Countries are ranked from best to worst according to the projection results for 2040. * The projections assume that, beginning in 2015, each country moves to a debt-neutral fiscal balance in its ―rest of government‖ budget.
  • 9. Fiscal Room Category Budget Room Indicator Total Public Benefits to the Elderly as a Percent of Government Outlays in 2007 and 2040, Assuming Cuts in Other Spending Pay for All Growth in Public Benefits* India 6.7 US 24.2 12.5 44.1 Mexico 10.2 France 31.8 21.2 2007 44.9 Russia 17.3 Korea 12.0 27.9 2040 46.4 Chile 29.2 Germany 36.3 30.9 48.8 Poland 24.0 Netherlands 26.3 33.3 50.1 Sweden 29.9 Italy 37.7 35.5 51.0 Canada 21.2 Japan 39.2 36.3 51.0 China 12.6 Switzerland 30.4 36.3 52.6 UK 27.4 Brazil 23.8 41.2 55.6 Australia 26.0 Spain 36.4 42.5 64.0 0% 20% 40% 60% 80% 0% 20% 40% 60% 80% Note: Countries are ranked from best to worst according to the projection results for 2040. * The projections assume that, beginning in 2015, each country moves to a debt-neutral fiscal balance in its ―rest of government‖ budget.
  • 10. Fiscal Room Category Borrowing Room Indicator Net Public Debt as a Percent of GDP, Assuming that Borrowing Pays for All Growth in Public Benefits, 2007–2040* 2007 2020 2030 2040 2007 2020 2030 2040 1 Chile -13.7 -14.5 -26.0 -31.1 11 India† 78.3 84.6 80.0 108.0 2 Sweden -25.0 -12.9 -14.1 17.8 12 Germany 42.9 54.7 56.7 127.2 3 Russia 0.0 1.6 -6.2 32.0 13 Japan 80.4 104.6 114.9 133.6 4 China 1.7 -1.5 -1.1 39.0 14 France 34.0 60.7 73.5 149.2 5 Mexico 31.4 44.4 43.0 66.8 15 UK 28.8 58.3 76.9 152.6 6 Poland 17.0 32.4 41.7 70.1 16 Italy 87.1 100.8 103.6 168.2 7 Australia -6.6 -1.1 1.3 73.9 17 Netherlands 28.0 36.5 41.3 169.1 8 Korea -35.8 -33.4 -36.8 87.4 18 Spain 18.7 41.6 49.2 175.1 9 Switzerland 11.0 9.3 5.8 98.9 19 Brazil 42.0 37.3 37.2 175.2 10 Canada 23.1 32.6 32.7 104.8 20 US 42.3 65.0 76.2 179.0 Note: Countries are ranked from best to worst according to the projection results for 2040. * The projections assume that, beginning in 2015, each country moves to a debt-neutral fiscal balance in its ―rest of government‖ budget. † Data for India refer to gross debt.
  • 11. Benefit Dependence Category Benefit Share Indicator Public Benefits, as a Percent of Elderly Income, 2007–2040 Average Average 2007 2020 2030 2040 2007 2020 2030 2040 2007-40 2007-40 1 Mexico 25.3 26.6 26.0 26.5 27.1 11 Netherlands 49.6 48.9 49.6 51.6 49.8 2 Chile 34.8 30.6 26.9 26.3 30.8 12 China 48.0 52.5 51.0 54.8 52.1 3 India 27.4 32.2 34.5 26.5 31.6 13 Sweden 53.6 52.6 51.2 52.8 52.5 4 US 35.1 37.2 38.8 40.3 38.1 14 UK 51.5 52.5 52.2 55.1 52.8 5 Australia 43.1 39.5 40.3 41.2 40.5 15 Russia 57.4 55.9 57.4 54.9 56.5 6 Korea 29.9 40.9 44.0 45.9 41.3 16 Italy 60.5 58.1 55.8 55.9 57.6 7 Japan 46.9 44.5 42.2 42.6 43.9 17 Brazil 64.2 62.6 62.3 62.2 62.8 8 Canada 43.8 43.3 44.8 46.0 44.2 18 Spain 63.1 63.3 63.0 64.2 64.0 9 Switzerland 41.5 43.6 44.9 47.1 44.3 19 France 66.7 65.8 66.2 67.4 66.3 10 Germany 54.5 47.8 45.2 47.1 48.4 20 Poland 77.1 68.6 63.0 56.7 66.8 Note: Countries are ranked from best to worst according to the average for 2007 to 2040.
  • 12. Benefit Dependence Category Benefit Cut Indicator Percent of Elderly Households That Would Be Pushed into Poverty Today by a 10 Percent Cut in Public Benefits* India 0.1 Italy 3.3 Mexico 0.6 Spain 4.1 Korea 0.7 Russia 4.6 Brazil 1.2 Sweden 5.1 China 1.2 Canada 5.3 Poland 2.2 UK 5.8 Chile 2.3 Australia 5.9 France 2.8 Germany 6.2 Japan 2.9 Switzerland 6.3 US 3.0 Netherlands 7.7 0% 2% 4% 6% 8% 10% 0% 2% 4% 6% 8% 10% Note: Countries are ranked from best to worst. * Data refer to various years between 1999 and 2007 and exclude public health benefits. Poor households are households with incomes beneath 50 percent of the median income for all households.
  • 13. GAP INCOME ADEQUACY INDEX TOTAL INCOME INCOME VULNERABILITY FAMILY SUPPORT CATEGORY CATEGORY CATEGORY Measures the overall level of Measures income adequacy for Measures the strength of family and trend in the income of the ―middle class‖ elders and the support networks in each elderly relative to the nonelderly extent of elderly poverty in each country in each country country TOTAL TOTAL MEDIAN MEDIAN POVERTY FAMILY FAMILY INCOME INCOME INCOME INCOME LEVEL TIES SIZE LEVEL TREND LEVEL TREND INDICATOR INDICATOR INDICATOR INDICATOR INDICATOR INDICATOR INDICATOR The % of the The % of the The change The ratio of The % The ratio of The % elderly with elderly living in the average after- change in the median after- change in the incomes in households average tax elderly to ratio of tax elderly to ratio of beneath 50% with their number of nonelderly average after- nonelderly median after- of the median adult children surviving income in tax elderly to income in tax elderly to income for all in 2007 children of 2040, includin nonelderly 2040, excludi nonelderly persons in the elderly g public income from ng public income from 2007 or the from 2007 to health 2007 to health 2007 to most recent 2040 benefits 2040, includin benefits 2040, excludi available year g public ng public health health benefits benefits
  • 14. Total Income Category Total Income Level Indicator Ratio of Average After-Tax Elderly to Nonelderly Income, Including Public Health Benefits, 2007–2040 2007 2020 2030 2040 2007 2020 2030 2040 1 Netherlands 1.29 1.37 1.52 1.72 11 Japan 1.19 1.12 1.11 1.12 2 US 1.43 1.54 1.62 1.67 12 Spain 1.00 1.06 1.05 1.06 3 Brazil 1.33 1.40 1.47 1.54 13 Italy 1.12 1.12 1.09 1.04 4 Germany 1.31 1.43 1.48 1.48 14 Switzerland 0.86 0.87 0.88 0.89 5 Chile 1.41 1.45 1.39 1.38 15 Mexico 0.94 0.88 0.85 0.82 6 Sweden 1.26 1.21 1.27 1.28 16 Korea 0.81 0.82 0.79 0.79 7 Australia 1.04 1.09 1.14 1.20 17 India 0.78 0.83 0.85 0.78 8 UK 1.05 1.08 1.14 1.19 18 Poland 0.75 0.70 0.76 0.74 9 Canada 1.13 1.11 1.11 1.14 19 Russia 0.68 0.65 0.65 0.71 10 France 1.16 1.09 1.10 1.13 20 China 0.52 0.53 0.50 0.51 Note: Countries are ranked from best to worst according to the projection results for 2040.
  • 15. Total Income Category Total Income Trend Indicator Percent Change in the Ratio of Average After-Tax Elderly to Nonelderly Income from 2007 to 2040, Including Public Health Benefits Netherlands 32.9 Canada 0.7 US 17.0 India 0.5 Brazil 15.9 Poland -1.2 Australia 15.7 China -1.8 UK 13.4 Chile -2.2 Germany 13.0 Korea -2.9 Spain 5.7 France -3.1 Russia 3.9 Japan -5.6 Switzerland 3.8 Italy -6.6 Sweden 1.8 Mexico -12.7 -20% -10% 0% 10% 20% 30% 40% -20% -10% 0% 10% 20% 30% 40% Note: Countries are ranked from best to worst.
  • 16. Income Vulnerability Category Median Income Level Indicator Ratio of Median After-Tax Elderly to Nonelderly Income, Excluding Public Health Benefits, 2007–2040* 2007 2020 2030 2040 2007 2020 2030 2040 1 Brazil 1.23 1.24 1.26 1.30 11 Italy 1.02 0.99 0.94 0.87 2 Netherlands 1.00 1.02 1.13 1.27 12 Canada 0.91 0.87 0.85 0.81 3 US 1.16 1.22 1.27 1.26 13 France 0.89 0.78 0.76 0.75 4 Germany 1.05 1.04 1.04 1.04 14 Poland 0.80 0.71 0.77 0.72 5 Chile 1.11 1.11 1.02 0.99 15 Switzerland 0.73 0.71 0.71 0.71 6 Japan 1.11 1.00 0.95 0.96 16 India 0.76 0.78 0.78 0.71 7 Sweden 0.94 0.92 0.94 0.94 17 Russia 0.64 0.59 0.58 0.61 8 Australia 0.89 0.85 0.88 0.93 18 Mexico 0.72 0.64 0.60 0.56 9 Spain 0.93 0.95 0.93 0.93 19 Korea 0.59 0.57 0.53 0.52 10 UK 0.88 0.88 0.90 0.93 20 China 0.39 0.38 0.35 0.34 Note: Countries are ranked from best to worst according to the projection results for 2040. * Data for both the elderly and nonelderly refer to the third quintile of the income distribution.
  • 17. Income Vulnerability Category Median Income Trend Indicator Percent Change in the Ratio of Median After-Tax Elderly to Nonelderly Income from 2007 to 2040, Excluding Public Health Benefits* Netherlands 27.7 India -6.9 US 8.8 Poland -9.4 Brazil 5.5 Canada -10.2 UK 5.3 Chile -10.8 Australia 4.6 China -12.1 Spain 0.1 Korea -13.2 Sweden -0.8 Japan -14.2 Germany -0.9 Italy -14.8 Switzerland -2.5 France -15.9 Russia -5.5 Mexico -21.9 -35% -25% -15% -5% 5% 15% 25% 35% -35% -25% -15% -5% 5% 15% 25% 35% Note: Countries are ranked from best to worst. * Data for both the elderly and nonelderly refer to the third quintile of the income distribution.
  • 18. Income Vulnerability Category Poverty Level Indicator Percent of the Elderly Living in Poverty Today* Netherlands 2.3 Chile 14.0 Poland 3.7 UK 15.4 Brazil 5.1 Australia 20.9 Sweden 5.5 India 21.8 France 8.1 Japan† 22.0 Canada 8.9 US 22.4 Germany 9.8 Spain 22.6 Italy 10.7 China 25.0 Switzerland 12.7 Mexico 25.5 Russia 13.8 Korea 36.2 0% 10% 20% 30% 40% 0% 10% 20% 30% 40% Note: Countries are ranked from best to worst. * Data refer to various years between 999 and 2007 and exclude public health benefits. Poor persons are persons with incomes beneath 50 percent of the median income for all persons. † Data for Japan refer to elderly aged 65 and older.
  • 19. Family Support Category Family Ties Indicator Percent of the Elderly Living in Households with Their Adult Children in 2007 Italy 28.2 India 82.8 China 64.0 Canada 20.5 Mexico 57.3 US 16.9 Chile 54.5 Australia 16.2 Brazil 51.3 France 10.5 Japan 44.0 UK 9.7 Spain 42.4 Germany 8.4 Russia 39.9 Switzerland 6.4 Korea 37.2 Netherlands 5.3 Poland 31.6 Sweden 4.1 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% Note: Countries are ranked from best to worst.
  • 20. Family Support Category Family Size Indicator Average Number of Surviving Children of the Elderly: 2007, 2040, and Change from 2007 to 2040 2007 2040 Change 2007 2040 Change 1 Sweden 2.1 2.0 -0.2 11 US 1.9 1.0 -1.0 2 Japan 2.0 1.5 -0.5 12 Australia 3.0 2.0 -1.0 3 Poland 2.6 2.0 -0.6 13 Netherlands 2.7 1.6 -1.1 4 UK 2.4 1.9 -0.6 14 Chile 3.5 2.4 -1.1 5 France 2.5 1.9 -0.6 15 Spain 2.7 1.4 -1.2 6 Germany 2.1 1.4 -0.7 16 Canada 3.2 1.7 -1.5 7 Switzerland 2.2 1.6 -0.7 17 China 3.5 2.0 -1.6 8 Russia 2.2 1.5 -0.7 18 Brazil 3.8 2.1 -1.7 9 India 3.5 2.6 -0.9 19 Korea 3.6 1.8 -1.8 10 Italy 2.3 1.4 -0.9 20 Mexico 5.0 2.6 -2.5 Note: Countries are ranked from best to worst according to the projected change from 2007 to 2040.
  • 21. GAP Index Country Rankings Fiscal Sustainability Index Income Adequacy Index 1 India 1 Netherlands 2 Mexico 2 Brazil 3 Chile 3 US 4 China 4 Germany 5 Russia 5 UK 6 Poland 6 Australia 7 Australia 7 Sweden 8 Japan 8 Chile 9 Canada 9 Spain 10 Sweden 10 India 11 US 11 Canada 12 Korea 12 Japan 13 Switzerland 13 Poland 14 Germany 14 Switzerland 15 UK 15 Russia 16 Italy 16 France 17 France 17 Italy 18 Brazil 18 China 19 Netherlands 19 Korea 20 Spain 20 Mexico
  • 22. GAP Index Reform Strategy Guide 1. Reduce 4. Increase 2. Reduce 5. Strengthen public 3. Extend funded 6. Increase 7. Increase health-care poverty pension work lives pension fertility rates immigration cost growth floors benefits savings Australia ★ ★★ ★ ★★ ★ Brazil ★★★ ★ ★ ★★ ★ ★ Canada ★ ★★ ★ ★★ ★ Chile ★ ★ ★ ★ ★ ★ China ★ ★★ ★★ ★★★ ★★ ★ France ★★★ ★★★ ★★★ ★★★ ★ ★ Germany ★★★ ★★ ★★ ★★ ★★★ ★★★ India* ★★ ★★ ★★ Italy ★★★ ★★ ★★★ ★★ ★ ★★★ ★★ Japan ★★★ ★★ ★★ ★★ ★★★ ★★★ Korea ★ ★ ★★★ ★★★ ★★★ ★★★ Mexico ★★ ★★★ ★ Netherlands ★★ ★★★ ★★ ★★ ★★ Poland ★★★ ★★ ★★ ★★★ ★★ Russia ★ ★★ ★★ ★ ★★★ ★ Spain ★★★ ★★ ★★★ ★★★ ★★ ★★★ ★★ Sweden ★★ ★★ ★ ★ ★ Switzerland ★ ★★ ★ ★ ★★★ ★ UK ★ ★★ ★★ ★ ★ ★ US ★ ★★★ ★ ★★ Reform Guide Key: No Stars = Not a Priority ★ = Low Priority ★★ = Significant Priority ★★★= High Priority
  • 23. Annex
  • 24. GAP Index Reform Strategy Guide No Stars = ★★ = ★= ★★★= Reform Guide Key Not a Significant Low Priority High Priority Priority Priority Strategy 1: Stars refer to projected current-deal public < 5% 5–10% 10–15% > 15% pension benefits to the elderly in 2040 as a % of GDP Strategy 2: Stars refer to projected public health < 4% 4–6% 6–8% > 8% benefits to the elderly in 2040 as a % of GDP Strategy 3: Stars refer to projected labor-force > 40% 30–40% 20–30% < 20% participation rate of the elderly aged 60–74 in 2040 Strategy 4: Stars refer to projected funded pension > 25% 15–25% 5–15% < 5% benefits as a % of elderly cash income in 2040 Strategy 5: Stars refer to percent of the elderly living in < 10% 10–20% 20–25% > 25% relative poverty today Strategy 6: Stars refer to projected total fertility rates > 2.0 1.8–2.0 1.5–1.8 < 1.5 for the period 2010-2040 moderate aging moderate aging & high & low Strategy 7: Stars refer to a composite measure of net low aging & high high aging & low immigration or immigration or immigration rates and the degree of population aging † immigration low aging & low high aging & immigration immigration high immigration * Following our priority categories for strategy seven, India, which has a low net immigration rate and low aging, should receive one star. But because its aging trend is so moderate compared with other Index countries, we make an exception and give it no stars. † Countries are divided into low-immigration countries (those below the mean for all Index countries) and high-immigration countries (those above the mean). They are also divided into three demographic groups according to the projected elderly share of the population in 2040: low (under 30%), moderate (30-35%), and high (over 35%).
  • 25. Public Pension Benefits to the Elderly, as a Percent of GDP in 2007 and 2040: Current-Law versus Current-Deal Scenario* Current Current Current Current 2007 Law Deal* 2007 Law Deal* 2040 2040 2040 2040 Australia 4.6 6.5 8.0 Korea 1.4 7.5 4.8 Brazil 6.5 13.4 16.1 Mexico 0.8 0.8 2.1 Canada 3.9 5.6 7.7 Netherlands 5.3 10.7 10.0 Chile 4.2 3.3 9.4 Poland 7.3 8.4 15.8 China 2.2 5.5 6.0 Russia 3.5 5.6 6.6 France 11.2 12.8 19.0 Spain 8.0 14.7 17.4 Germany 10.0 11.9 18.5 Sweden 8.8 9.9 11.8 India 1.4 2.2 2.7 Switzerland 5.4 8.5 9.2 Italy 12.3 15.1 23.5 UK 5.8 7.9 8.1 Japan 9.1 10.1 17.4 US 4.1 6.1 6.8 * The current-deal scenario assumes that workers in the future on average retire at the same age they do today and that benefits replace the same share of wages.
  • 26. Strategy 1: Reduce public pension benefits Public Pension Benefits to the Elderly, as a Percent of GDP in 2007 and 2040: Current-Law and Current-Deal Scenario* Current Current Current Current 2007 Law Deal* Stars 2007 Law Deal* Stars 2040 2040 2040 2040 Mexico 0.8 0.8 2.1 zero Chile 4.2 3.3 9.4 ★ India 1.4 2.2 2.7 zero Netherlands 5.3 10.7 10.0 ★★ Korea 1.4 7.5 4.8 ★ Sweden 8.8 9.9 11.8 ★★ China 2.2 5.5 6.0 ★ Poland 7.3 8.4 15.8 ★★★ Russia 3.5 5.6 6.6 ★ Brazil 6.5 13.4 16.1 ★★★ US 4.1 6.1 6.8 ★ Spain 8.0 14.7 17.4 ★★★ Canada 3.9 5.6 7.7 ★ Japan 9.1 10.1 17.4 ★★★ Australia 4.6 6.5 8.0 ★ Germany 10.0 11.9 18.5 ★★★ UK 5.8 7.9 8.1 ★ France 11.2 12.8 19.0 ★★★ Switzerland 5.4 8.5 9.2 ★ Italy 12.3 15.1 23.5 ★★★ * The current-deal scenario assumes that workers in the future on average retire at the same age they do today and that benefits replace the same share of wages. ★★ = No Stars = ★= ★★★= Reform Guide Key Significant Not a Priority Low Priority High Priority Priority Strategy 1: Stars refer to projected current-deal public < 5% 5–10% 10–15% > 15% pension benefits to the elderly in 2040 as a % of GDP
  • 27. Strategy 2: Reduce health-care cost growth Public Health Benefits to the Elderly, as a Percent of GDP in 2007 and 2040 2007 2040 Stars 2007 2040 Stars India 0.2 0.9 zero Sweden 4.9 6.7 ★★ China 0.6 2.3 zero Spain 3.1 6.9 ★★ Mexico 0.7 2.8 zero Japan 4.0 7.0 ★★ Chile 1.1 3.3 zero Germany 4.1 7.3 ★★ Russia 1.5 3.5 zero UK 4.0 7.5 ★★ Poland 1.7 3.7 zero Switzerland 3.4 7.6 ★★ Korea 1.3 5.4 ★ Canada 3.6 7.7 ★★ Brazil 1.4 5.4 ★ Netherlands 3.9 8.5 ★★★ Australia 2.7 6.1 ★★ France 4.5 9.2 ★★★ Italy 3.4 6.7 ★★ US 4.2 9.3 ★★★ ★★ = No Stars = ★= ★★★= Reform Guide Key Significant Not a Priority Low Priority High Priority Priority Strategy 2: Stars refer to projected public health benefits to < 4% 4–6% 6–8% > 8% the elderly in 2040 as a % of GDP
  • 28. Strategy 3: Extend work lives Labor-Force Participation Rate of the Elderly Aged 60–74 in 2007 and 2040 2007 2040 Stars 2007 2040 Stars Korea 45.6 44.6 zero UK 25.3 29.3 ★★ Japan 40.9 41.7 zero China 31.0 27.8 ★★ US 36.5 41.0 zero India 26.4 25.4 ★★ Mexico 41.1 40.1 zero Russia 18.3 24.2 ★★ Chile 33.8 36.6 ★ Germany 15.7 23.5 ★★ Brazil 36.7 36.6 ★ Netherlands 18.2 22.4 ★★ Australia 27.0 30.2 ★ Poland 11.8 21.8 ★★ Canada 27.8 30.2 ★ Spain 15.2 17.6 ★★★ Sweden 33.5 30.1 ★ Italy 10.5 13.9 ★★★ Switzerland 30.7 30.0 ★ France 7.9 8.5 ★★★ ★★ = No Stars = ★= ★★★= Reform Guide Key Significant Not a Priority Low Priority High Priority Priority Strategy 3: Stars refer to projected labor-force participation > 40% 30–40% 20–30% < 20% rate of the elderly aged 60–74 in 2040
  • 29. Strategy 4: Increase funded pension savings Funded Pension Benefits as a Percent of Elderly Cash Income in 2007 and 2040 2007 2040 Stars 2007 2040 Stars Netherlands 24.4 28.8 zero Brazil 2.2 8.2 ★★ Canada 26.8 28.6 zero Russia 0.4 8.1 ★★ Australia 15.6 28.5 zero Mexico 2.3 7.5 ★★ Switzerland 20.9 25.0 zero Japan 7.3 7.1 ★★ US 19.6 21.1 ★ India 1.7 6.9 ★★ Sweden 9.3 18.8 ★ Germany 2.7 6.7 ★★ Chile 9.3 16.6 ★ Italy 2.9 5.9 ★★ UK 16.3 16.3 ★ Spain 2.9 4.6 ★★★ Poland 0.0 14.3 ★★ Korea 4.1 3.9 ★★★ China 0.0 9.7 ★★ France 1.3 1.8 ★★★ ★★ = No Stars = ★= ★★★= Reform Guide Key Significant Not a Priority Low Priority High Priority Priority Strategy 4: Stars refer to projected funded pension benefits as > 25% 15–25% 5–15% < 5% a % of elderly cash income in 2040
  • 30. Strategy 5: Strengthen poverty floors Percent of the Elderly Living in Poverty Today* 2007 Stars 2007 Stars Netherlands 2.3 zero Chile 14.0 ★ Poland 3.7 zero UK 15.4 ★ Brazil 5.1 zero Australia 20.9 ★★ Sweden 5.5 zero India 21.8 ★★ France 8.1 zero Japan† 22.0 ★★ Canada 8.9 zero US 22.4 ★★ Germany 9.8 zero Spain 22.6 ★★ Italy 10.7 ★ China 25.0 ★★★ Switzerland 12.7 ★ Mexico 25.5 ★★★ Russia 13.8 ★ Korea 36.2 ★★★ * Data refer to various years between 1999 and 2007 and exclude public health benefits. Poor persons are persons with incomes beneath 50 percent of the median income for all persons. † Data for Japan refer to elderly aged 65 and older. ★★ = No Stars = ★= ★★★= Reform Guide Key Significant Not a Priority Low Priority High Priority Priority Strategy 5: Stars refer to percent of the elderly living in < 10% 10–20% 20–25% > 25% relative poverty today
  • 31. Strategy 6: Increase fertility rates Total Fertility Rate: Average for 2010-2040 Average Average Stars Stars 2010-2040 2010-2040 India 2.2 zero Netherlands 1.7 ★★ Mexico 2.2 zero Canada 1.6 ★★ US 2.1 zero Switzerland 1.5 ★★★ Chile 1.9 ★ Spain 1.4 ★★★ Brazil 1.9 ★ Italy 1.4 ★★★ France 1.9 ★ Russia 1.4 ★★★ Sweden 1.9 ★ Germany 1.3 ★★★ UK 1.8 ★ Japan 1.3 ★★★ Australia 1.8 ★ Poland 1.3 ★★★ China 1.8 ★★ Korea 1.2 ★★★ ★★ = No Stars = ★= ★★★= Reform Guide Key Significant Not a Priority Low Priority High Priority Priority Strategy 6: Stars refer to projected total fertility rates for the > 2.0 1.8–2.0 1.5–1.8 < 1.5 period 2010-2040
  • 32. Strategy 7: Increase immigration Aging Immigration Aging Immigration Stars Stars Group Group Group Group India Low Low zero Canada Med High ★ Australia Low High zero France Med High ★ Sweden Low High zero Switzerland Med High ★ UK Low High zero Netherlands Med Low ★★ US Low High zero Poland Med Low ★★ Brazil Low Low ★ Italy High High ★★ Chile Low Low ★ Spain High High ★★ China Low Low ★ Germany High Low ★★★ Mexico Low Low ★ Japan High Low ★★★ Russia Low Low ★ Korea High Low ★★★ ★★ = No Stars = ★= ★★★= Reform Guide Key Significant Not a Priority Low Priority High Priority Priority moderate aging moderate aging & low low aging & & high Strategy 7: Stars refer to a composite measure of net immigration or high aging & high immigration or immigration rates and the degree of population aging* high aging & low immigration immigration low aging & low high immigration immigration * Countries are divided into low-immigration countries (those below the mean for all Index countries) and high-immigration countries (those above the mean). They are also divided into three demographic groups according to the projected elderly share of the population in 2040: low (under 30%), moderate (30-35%), and high (over 35%).