icnb 2025 Session 2

Session 2: Securing the Future: Strengthening Social Security and Pension Frameworks for Ageing Societies

The ageing population is placing increasing pressure on welfare management and social security systems worldwide. As societies face growing numbers of retirees, traditional models of retirement and pension systems are being tested. Issues such as extending retirement ages and innovations in savings schemes are becoming critical. Additionally, the challenge of balancing contributions and benefits, especially with the increased risk of illness among older workers, is a pressing concern. In this session, we will explore how to design effective social security and pension reforms to ensure elderly wellness. We will examine various approaches to retirement savings, including mandatory, semi-mandatory, and voluntary schemes. We will also discuss different care systems—market-based, semi-market, and non-market solutions—and innovative policy measures needed to support ageing populations.Read More!

Moderator:

Asst. Prof. Dr. Passanan Assavarak,
Department of Social Sciences and Humanities at King Mongkut’s University of Technology Thonburi

Speakers:

Main idea: Emerging Asia must prioritize non-contributory, means-tested social pensions due to high informality in labor markets and weakening family support structures.
Important points:

Informal labor undermines contributory pension systems:
○ In many Asian countries, over 50% of the working population is employed informally, meaning they do not contribute to or qualify for formal pension schemes.
○ Contributory systems fail to provide coverage for these populations, leaving a significant gap in old-age security.
Declining filial piety threatens traditional elder support:
○ Cultural changes and urban migration have reduced the reliance on children for elder care.
○ This transition leaves elderly populations, especially in rural areas, vulnerable and without support.
Non-contributory social pensions are a viable alternative:
○ These pensions provide a safety net regardless of employment history, targeting those with no access to formal retirement schemes.
○ Australia’s system is cited as a model: means-tested, flat-rate, with a high access age and relatively low cost (~2% of GDP).
Means testing and age targeting enhance efficiency:
○ By tailoring pensions to those most in need (e.g., those not receiving contributory pensions), governments can manage costs while ensuring coverage.
○ Raising the eligibility age can help align fiscal sustainability with increasing life expectancy.
Start with social pensions, not as an afterthought:
○ In many Asian countries, policy focus starts with contributory systems, neglecting the majority in informal employment.
○ Piggott argues the starting point should be universal or targeted social pensions tailored to demographic realities.

1. Prof. John Piggott,
Director of the Australian Research Council Centre of Excellence in Population Ageing Research at the University of New South Wales, Australia

Main idea: To ensure fiscal sustainability in aging societies, governments must increase retirement ages, promote domestic savings, ensure government debt stability through domestic bond holdings, and address declining policy effectiveness due to demographic shifts.
Important points:

Asia’s aging population is accelerating
By 2030, Japan, South Korea, Thailand, and China will face a dramatic rise in elderly populations. In Japan, over 30% of the population will be 65+, creating immense fiscal pressure.
Social security and debt service dominate budgets
Japan allocates roughly one-third of its budget to social security and another third to interest payments and debt redemption. This leaves limited fiscal space for growth-enhancing investments.
Japan’s debt remains stable due to domestic investors
Over 90% of Japan's government bonds are held domestically, minimizing volatility. In contrast, countries like Greece faced crises due to heavy reliance on foreign debt holders.
High savings during demographic dividend help
Japan leveraged its high domestic savings during the 1980s-90s to manage aging. Other nations should build reserves before aging accelerates.
ging reduces the effectiveness of macroeconomic policy
○ Fiscal and monetary policies become less effective as fewer people are economically active. Aging societies require new approaches, such as AI and robotics integration.
Postponing retirement and productivity-based wages are key
Extending work life and incentivizing productivity across age groups can mitigate the economic impact of aging. Japan is promoting AI and robotics to help older adults remain employed.
Innovative rural care models needed
In Hokkaido, mobile buses deliver healthcare, finance, and groceries to seniors in rural areas. This model could be replicated across aging rural regions in Asia.

2. Prof. Dr. Naoyuki Yoshino,
Professor Emeritus of Economics at Keio University, Chief Advisor of Financial Research Center, FSA (Financial Services Agency) at Government of Japan, Special Professor at Tokyo Metropolitan University

Main idea: Pension systems, especially in Europe, are vulnerable to global macroeconomic shifts, aging, and underinvestment. Future sustainability depends on literacy, innovation, peace, and coordinated international action.
Important points:

Global uncertainty undermines investment in pensions:
○ Rising geopolitical tensions, protectionism, and economic divergence reduce policy predictability and erode long-term financial planning.
Public debt and low growth restrict fiscal options:
○ Public debt is projected to reach 100% of global GDP by 2030.
○ Developed economies are seeing a long-term decline in potential GDP growth, limiting their ability to expand pension coverage.
Military spending outweighs social or green investment:
○ Global defense spending hit $2.7 trillion in 2024, while green financing lags far behind.
○ Resources diverted to defense reduce fiscal space for aging and welfare policies.
Dependency ratios will surge globally, especially in Europe:
○ By 2100, Europe’s dependency ratio is expected to rise over 25 percentage points, putting immense pressure on working-age populations.
Financial literacy is key to future pension security:
○ Countries with high-performing pension systems (e.g., Netherlands, Sweden) also lead in financial education. ○ Teaching individuals to save and invest wisely is as critical as policy reform.
Capital market development is needed:
○ The EU must strengthen private pensions through deeper capital markets (e.g., EU Savings and Investment Union).
A new Bretton Woods-style framework is needed:
○ Radulescu calls for global multilateralism, investment in peace, and a new coordinated approach to global economic governance to ensure pension sustainability.

3. Prof. Dr. Andrei Radulescu,
International Senior Macroeconomist at Institute for World Economy, Romanian Academy

Main idea: Thailand is implementing a comprehensive, multi-sectoral policy framework to address demographic shifts through active aging, community-based initiatives, and data-driven welfare reform.
Important points:

Thailand is entering “super-aged” status:
○ By 2033, 28% of the population will be over 60 years old, putting strain on health care, welfare, and labor systems.
High informality limits policy reach:
○ 52% of Thai workers are in the informal sector, complicating retirement age policies and reducing pension contribution coverage.
○ Policies must consider both formal and informal labor realities.
Family size decline impacts traditional caregiving:
○ Household sizes have dropped from 5.6 (1960s) to under 3 today, eroding intergenerational support structures.
○ This raises the importance of state welfare and institutional care solutions.
“5x5 Let’s Turn the Tide” policy framework:
○ Targets five population groups (children, youth, working-age, elderly, and persons with disabilities).
○ Focuses on five strategic actions, including empowerment, prevention, economic opportunities, and ecosystem strengthening.
Practical community models promote engagement:
○ Initiatives like “Schools for Older Persons” and CSR café jobs for elderly workers promote social inclusion and mental well-being.
Holistic “Wellbeing and Life Protector” program:
○ Community caregivers, selected by public consensus, offer physical, legal, and rights-based support to older persons.
National data integration for targeted service delivery:
○ A recent MOU across 29 agencies enables centralized, cross-referenced data to reduce redundancy, identify gaps, and improve program inclusion.

4. Ms.Suthida Konglertmongkol,
International Cooperation Sub-Division, Strategy and Planning Division, Department of Older Persons, Ministry of Social Development and Human Security

Main idea: Aging societies must build financially sustainable and inclusive public pension systems, ensuring universal coverage and fairness through gradual reforms and social dialogue.
Important points:

Aging is a success, but challenges system financing:
○ Longevity reflects development, but strains existing social security structures, especially as contributor-beneficiary ratios worsen.
Public social security must remain central:
○ Universal systems anchored in international norms (e.g., ILO Convention 102, Recommendation 202) provide stability and equity.
○ Yet only Japan in Asia has ratified these standards, showing a gap in adoption.
Retirement age reform is necessary but sensitive:
○ Raising the retirement age helps fiscal health but requires public consensus, gender equity considerations, and long lead times to adjust expectations.
Informality undermines system coverage and revenue:
○ Many countries have large informal sectors, requiring strategies to increase registration, compliance, and contributions.
Balance working life and retirement life in longer lifespans:
○ With people living longer, policies must balance extended employment with dignified retirement, considering labor shortages and migration.
Asia-Pacific spends less than global average on social protection:
○ Regional average is ~11.9% of GDP vs. 20% globally; Europe and Japan spend ~25%.
○ Greater resource allocation is needed to ensure system adequacy.
Pension sustainability must align with growth rates (RG condition):
○ The growth rate of pension spending must not exceed the growth of the economy minus indexation rates.
○ Gradual adjustments to benefits and retirement age are key tools for meeting this condition.

5. Mr. Kenichi Hirose,
Senior Social Protection Specialist at the International Labour Organization’s Regional Office in Bangkok, Thailand (ILO)