Funding the elderly

Friday, 11 September 2015 00:00 - - {{hitsCtrl.values.hits}}

SRI LANKA, laden with a fast aging population, is leading the region in providing assistance to elders, but faces challenges in ensuring financial security.

Sri Lanka ranks moderately at 46 on the HelpAge International’s Global Age Watch Index which ranks countries by how well their ageing populations are faring in four domains that are key to older people’s wellbeing - income security, health status, capability and their enabling environment.

The latest World Bank Sri Lanka Demography Transition Report shows 67% of Sri Lanka’s population is of working age and the said population will continue to remain significantly larger than the dependent population until 2017 with the makings to play a crucial role in advancing the country’s economy.

The findings of a series of technical studies put together by Sri Lankan academics and the World Bank highlighted that the portion of the elderly population over 60 years of age is expected to increase from 12.5% to 16.7% in 2021, and by 2041 one out of every four people is expected to be an elderly person.

Examining the economic implications of Sri Lanka’s demographic transition, focusing on employment and productivity issues, the report called for effective policy planning such as improving labour market outcomes and providing adequate services for vulnerable groups which could help ensure a smooth demographic transition. What happens when a young population ages? How should countries prepare for it or should they even prepare? Much of the world faces similar situations and challenges – globally, within the next ten years there will be one billion elderly people worldwide and by 2050 nearly one in five people in developing countries will be over the age of 60.

In reference to the welfare of the elderly, retirement benefits were noted to be crucial. Out of the total elderly population in Sri Lanka, only 15% receive pension benefits and 26% receive EPF, while approximately 41% receive some benefit or the other. However, the remaining 18% of the elderly population receives no retirement benefits and tends to rely on the welfare of their children, relatives and friends.

This is also where Sri Lanka faces the biggest challenge. Locally little attention is paid to retirement funding outside of the Government-mandated EPF and ETF. Life insurance policies have been promoted by the private sector but there reach remains minimal. Banks have a significant responsibility in crafting products that enable even low-income workers to save for the future and protect their assets against inflation. Pragmatic Sri Lankans prefer to save in assets but there management often becomes difficult as people grow older, making them dependent on children or other relatives.

Allowing the elderly to delay retirement or provide them with flexible work hours is another difficult area that has made little headway. Extra income is also crucial to deal with healthcare, transport, living quarters and other essentials that become ever more expensive as people age. Keeping an aging population healthy is crucial to their productivity and continued economic growth in a country with demographic slowdown.

As the youth population reduces in proportion to the aging it is essential to strike a balance that works to empower both sides of the paradigm. Aging people have rights too.