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Currently showing: Funding longer lives > Long-term care

11 Apr 13 17:43

The proportion of the world's population aged over 60 will jump from 11.2% to 21.8% over the next 40 years. You can find out more about demographics via Alison Martin's video ( Although the increase in longevity is to be celebrated, it puts enormous strain on public services and financial systems. Here is an overview of the key areas to consider:

Retirement income
Many of today's retirees enjoy receiving retirement income from various sources, such as the state and their former employer. Due to factors like increasing life expectancy, there are challenges for providing this in the future.

There appears to be a trend for passing the responsibility for funding retirement income to the individual. Many employers are converting pension schemes from ones which pay a guaranteed income to one where the employee takes on the financial and longevity risks. Many governments are now looking at ways to reduce their state pension burden, e.g. through raising retirement ages.

For many developing nations, the key challenge is to make sure that sufficient systems are in place to accommodate the rapidly ageing society.

Long-term care
As you get older, the chances of requiring support with such activities as feeding and washing yourself rises. What's more, the number of people with dementia, often a cause for requiring care, is estimated to grow by 225% over the next 40 years (1).

With falling birth rates and rising migration rates, the availability of care provided by family members will decline while the demand rises. New ways of providing and funding this care are being debated in many countries.

Older age healthcare
Swiss Re estimates that the Healthcare Gap (2) in 13 Asia-Pacific markets will grow from USD 9 billion in 2011 to USD 197 billion by 2020 at current rates due, in part, to ageing populations. This trend is not specific to this region and older age healthcare is another area which causes debate over future funding requirements.

The key questions
We are keen to discuss these issues and understand what different generations think about how we are going to tackle them. The unspoken intergenerational contract in societies will change as the working population gets smaller and the older population grows:

- What is the role of government in tackling these issues?
- Will the employer play a more or less important role in the future?
- What responsibilities do different generations have in funding their own ? and other generations' ? longer lives?
- Finally, where does the insurance industry fit in?

We'll be debating these issues in more detail in the coming months and we're looking forward to your participation! Please let us have your views.

Torben Thomsen
Chief Pricing Officer
Life & Health
Swiss Re

(1)Alzheimer's Disease International: World Alzheimer Report, 2009
(2)The difference between the market?s required level of healthcare spending and the amount that would be spent if total healthcare expenditure remained a constant percentage of GDP - Swiss Re: Healthcare Gap, Asia-Pacific, 2012

Category: Funding longer lives: Long-term care, Pension/retirement


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