Is Pension an Effective and Adequate Solution to the Challenges of Ageing?

Abstract

Reduced mortality rates coupled with the decrease in fertility rates are causing demographic shifts in population across the globe. Average life expectancy has improved due to impressive advances in medical science and advanced health care. This has triggered the need for pension reforms across the globe. Governments are trying their best to enhance the effectiveness of social security schemes. Multi-lateral organizations have advocated the principle of active ageing to ensure that the elderly population is not socially discriminated against and is given opportunities to continue to contribute to society. There is a need to create greater awareness about holistic health management right from a young age. Several academic experts have recommended the extending of the retirement age and increasing the ratio of women work force in the job market as a solution to address the increase in dependency ratio. India’s geographical diversity makes it more complex to arrive at a universal solution to address the challenges of providing social security to an ageing population. There is a need to look at other avenues to ensure that the elderly lead a life of dignity post-retirement. For instance, there is a need to align pension and health care schemes to meet the needs of an ageing population. This paper explores the benefits of supplementing pension schemes with other financial instruments to deal with the challenges of population ageing.