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Aging Policies and Intergenerational Equity
The world today is experiencing a situation where the older population exceeds the younger, and the population rate for people above the age of 60 is growing more rapidly than the total population in most parts of the world (UNFPA and HelpAge International 19). This is because conditions have become more favorable for people to lead long and healthier lives, and the fertility rate in most countries has decrease. Modern medicine, as well as improvement in diet and other living conditions has made it possible for people to live longer. This has reduced incidences of people dying because of disease. People are healthier today and they spend less time in the hospital because of illness. On the other hand, more people are opting to have fewer children, and some are opting to remain childless. Some policy analysts are of the opinion that the growing aging population is a burden to the younger generation, and that this will cause an increase in debts because of the high healthcare costs and other related costs; however, this is not the case. An aging population continues to have a significant positive effect on the economy, and changes and reforms in policy can lead to better management of pensions which will ensure that the pensioners benefit from their individual contributions.
Intergenerational equity is a contentious issue today because the young people are concerned about the contribution they make to the society through the taxes they pay. They are afraid that they will not receive their intended benefits for the taxes they pay. Taxpayers expect to benefit from the government by getting different services. The number of older people receiving government benefits is higher today compared to the younger population. Thus, the government pays more than it receives. This has been a major concern for the younger generation. They are concerned that they will have to pay more for the services received, yet they will receive less government services. Changes in policy and good policy implementation are essential toward ensuring that there is intergenerational equity (Wisensale 29-47).
People who perceive that older people are a burden to the society tend to assume that all the old people are the same and that they have the same problems and face the same challenges. Whereas some older people may require help because of their age, others are healthy and they continue working productively despite their old age. The advancement of modern medicine has made it possible for people to live long and healthier lives, and this means that they are more productive. They can work for many years compared to the preceding generation. This means that they no longer have to retire at an early age, and they can continue contributing to the society by working and paying taxes.
Many government and organizational policies have set the retirement age at 65 or lower. This has forced many people to retire while they are still reproductive, and able to contribute to the society. The more people retire early, the longer they will receive social benefits (Wisensale 29-47). Thus, stereotypes concerning age and government policies contribute more to the country’s financial and economic burden, than old age does. Having older people in the workplace is beneficial because they have acquired enough knowledge, skills, and experience. In addition, they tend to be more reliable and trustworthy. They have good work ethics, and they tend to be loyal to the organization. This is advantageous to the company because it does not have to spend much money training new employees. Older people do not have to receive their pensions early when they continue working. This shortens the time that the government pays the people. In turn, this reduces the expenses that it has to incur and it leads to less financial burden.
Despite retirement, the older population participates in different activities, including volunteering their services to the vulnerable members of the community and their families. They volunteer their services in different sectors such as education, health, and the environment (Beard et al. 13). They act as the children’s caretaker whenever necessary and they take time to look after other people who are older than them. Older people boost the economy, as they have more money to spend. They have an active social life, and they are willing to spend more money trying out new and modern items. They have more assets and fewer expenses compared to the younger generation, and this increases their disposable income. As Seinfeld and Maisel (46) observe, the older generation can support the universal design industry alone. They have more spending power, and this benefits the economy. The younger generation does not have as much spending power as the older people do, as they tend to have more obligations.
Older people have a significant control of the nation’s capital and investment, as they tend to invest more money. They leave this money to their children as inheritance through intergenerational transfer. Older people are more willing to invest in infrastructural projects, even if they will not reap all the benefits from it (Beard et al. 13). They are willing to spend on services that give them more quality of life, and this boosts the economy, as it creates more jobs, especially for the younger people. The older generation has made a significant contribution to the country’s economy, as many people have created jobs and started companies, giving the younger generation an opportunity to work. Older people are at an age of self-realization. They want to see what they have worked for all their lives. They are willing to make better use of their free time, and they are involved in staying fit by exercising and engaging in other activities. They are also willing to retain their mental agility, and they end up joining appropriate classes, where they acquire new knowledge and skills (Clarkson 137).
The challenges that appear once the old age sets in are an opportunity for people to make money and benefit from the spending power of the older generation. Some people have realized such opportunities and they have engaged in activities that improve the economic wellbeing of the older generation by providing them with the essential services. They have offered services that include driving the older people around, shopping for them, and designing and restructuring their houses to suit their needs. These activities fall under different industries, and they have given people a chance to get employment. The sports, pharmaceutical, and cosmetic industries are major beneficiaries of the older generation. Older people want to improve their lives and defy old age by looking younger and healthier (Gott 40). Thus the older generation continues to create jobs and they are important to the economy. These factors show the contribution of the older people to the economy. Having a limited view of the situation, compels one to see the few challenges that face some older people, instead of the bigger picture, which reveals the economic contribution of the older generation to the economy.
The younger generation has reason to be anxious concerning intergenerational equity. Despite the advantages of working with older people, many employers are reluctant towards giving them longer term employment, and some of them continue offering them incentives to retire early, which means they stop contributing to the society. In addition, the government uses the same old policies it has used for a long time, which means that people continue retiring early even if they are in a position to continue working and being productive members of the society. This may cause an intergenerational conflict, as young people may not see the point in contributing to a system where they will not benefit. Change in reforms is essential, to ensure that the government continues providing the much needed services to the people, and that every member who is in a position to work can continue doing so, irrespective of his or her age.
The way a country manages pension can be a boost or a drain to the economy. Older people who receive pensions have spent their working lives paying for it, and essentially, they are using their savings when they spend the money. The government has to identify ways of ensuring that it uses that pension to benefit the people. Some governments have invested the pension they receive on schemes that have provided high returns for the pensioners, and this has benefited the government as well. However, some governments have weak institutions and they do not have good governance (Sherlock 63). Such governments continue depending on the contribution of the younger generation since they have not been able to manage the pension they have received well.
Using a pay-as-you-go pension scheme may not be a feasible option. This option involves paying pension using the money contributed in a particular year. This presents a challenge to the government, as it has to balance the money paid out and the money that it receives. Whereas the number of people receiving pension in a particular year may remain the same, the number of people contributing to the scheme may decline due to factors such as unemployment. In such a situation, the government faces a deficit, and it has to find ways of ensuring that it gets sufficient funds for the next years. Some governments choose to use the capitalized scheme, which involves investing the money that the pensioner contributes, and using the money invested and the returns from that investment to pay those who have been contributing (Sherlock 65). This enhances a culture of savings and it does not strain the younger generation. People understand that they can only get the pension they have invested, and this encourages them to save more. Relying on individual contribution and responsibility is better and more practical for the economy. It ensures intergenerational equity since one generation does not have to provide for the other. This scheme depends on good governance, to ensure that the contribution received is invested wisely.
The perception that an aging population is a burden to the younger population is one sided and myopic. The older population has made a significant contribution to the country’s economy, and their willingness to have a better life even in old age continues improving the economy through job creation. Older people have contributed to the existing pension schemes, and they are reaping these benefits. Changes in a country’s pension scheme will result to better management of funds from the pensioners, since the government will be able to make investments that will result to returns. The government will benefit from a share of these returns, since it will be able to fund more services for the people. In addition, the pensioners will receive the accumulated savings, and they will benefit from the investment returns. This scheme requires good management and governance of funds. It reduces the burden on any generation and ensures intergenerational equity in the process, by ensuring individual responsibility on the part of the pensioners. The burden that the younger generation faces is not because of the aging population, but it is because of the continuous use of the same old inefficient policies, which have not accounted for the changes in the growing population.
Work Cited:
Beard, R. John et al. Global Population Ageing: Peril or Promise? Geneva: World Economic Forum, 2011.
Clarkson, John. Inclusive Design: Design for the Whole Population. New York: Springer, 2003. Print
Gott, Merryn. Sexuality, Sexual Health and Ageing. Berkshire: McGraw-Hill International, 2005. Print
Sherlock, L. Peter. Population Ageing and International Development: From Generalisation to Evidence. Bristol: The Policy Press, 2010. Print
Steinfeld, Edward and Jordana, Maisel. Universal Design: Creating Inclusive Environments. Hoboken: John Wiley & Sons, 2012. Print
UNFPA and HelpAge International. Ageing in the Twenty-First Century: A Celebration and a Challenge. UNFPA and HelpAge International 2012. Print
Wisensale, K. Steven. “Global Aging and Intergenerational Equity.” Journal of Intergenerational Relationships 1.1 (2003): 29-47