A leading development bank has expressed concern that Asia is facing an ageing crisis with weak and inadequate pension systems and family-based support dwindling.
"A young continent reaping the demographic dividend of a large youthful workforce is giving way to a greying continent where the ratio of retirees to workers is on the rise," senior Asian Development Bank economist Park Donghyun said in a study released by the Manila-based lender.
AdvertisementImproved female education and better medical care is inducing Asians to have fewer children, allowing them to live longer and causing a "seismic" demographic shift, Park said.
The median age of China, Indonesia, South Korea, Malaysia, Singapore, Thailand and Vietnam "will exceed the world average by 2050" which spells trouble for their pension systems along with that of the Philippines, the study said.
The greying phenomenon is more pronounced in East and Southeast Asia than in South Asia, it added.
"In contrast to industrialised countries, most Asian countries do not yet have mature, well-functioning pension systems," Park said.
"As a result, they are ill-prepared to provide economic security for the large number of retirees who loom on the horizon."
The bank found "key systemic failures" including low coverage, inadequate benefits, lack of financial sustainability and insufficient support for the elderly poor".
Meanwhile "the weakening of informal family-based old age support mechanisms suggests a greater role for formal pension systems throughout the region".
Asians have traditionally looked to their children to take care of their material needs in old age, in effect relying on a substitute pension system in a region where it was not uncommon for three generations to live under one roof.
However, rapid urbanisation and the reduced role of agriculture in the economy "are creating a vacuum in Asia?s old age support, a vacuum that must be filled by formal pension systems".
The study warned that globalisation had also weakened job security, pushing large numbers of people into the informal sector, where they enjoy no pension or labour protection coverage.
Park said the pension systems of the eight countries covered a mere 13.2-58 percent of the labour force, with the coverage rates for working-age populations at just 10.8-40 percent.
These compare poorly with around 90 percent of the labour force of developed countries and between 60 and 75 percent of the working-age population, the economist added.