THINK 20, or T20, is the research and policy advice network for the G20. For Japan’s G20 presidency in 2019, the T20 network is focused on ten taskforces. Task Force 10 (TF10), Aging Population and its Economic Impact + Migration, was established to focus on policy measures and actions aimed toward sustaining inclusive economic growth and well-functioning socioeconomic systems which provide social security to all people. The role of labour migration to alleviate the impact of declining labour forces and working populations will also be explored in the context of well-designed immigration policies that will support aging societies.

The taskforce has recently released its policy proposals to key questions deemed critical in face of population aging. They are contained in eleven policy briefs published on their websites.

The policy briefs include:

Taxation in Aging Societies: Increasing the Effectiveness and Fairness of Pension Systems, by Agustin Redonda, Vincenzo Galasso, Mark Mazur, Miranda Stewart, and Matthiew Whittaker.

Abstract: Population aging is accelerating worldwide and has significant socio-economic implications, including a decline in the size of the labour force, an increase in the age-dependency ratio and a redistribution of income and wealth. Hence, the redesign of pension systems has become a priority. Taxation is crucial to influence behaviour and tackle these issues, e.g. tax incentives for pension savings. Yet, whereas some progress has been made, much remains to be done to increase the effectiveness and fairness of pension systems. Thus, we urge G20 governments to take a systemic view of pension systems including socio-economic aspects such as education, migration, labour force participation and informality. Moreover, governments should take into account the distributional impact of tax policies for pension savings.

Aging, Fiscal Sustainability and Adequacy of Social Security Systems, by Rafal Chomik, John Piggott, and Sophie Yan.

Abstract: Population ageing poses unique challenges for social security systems. Developed countries, with well-established structures, will face increasing age-related spending. They will require further reforms that balance spending cuts against core promises across generations. Most emerging economies, on the other hand, lack comprehensive social security yet are ageing rapidly. They must establish comprehensive retirement income support structures, universal health services, and publicly supported long term care in a rapidly changing macro-demographic environment.

This policy brief, while bringing a broad perspective to these challenges, focuses its policy analysis on retirement income, the first frontier in reforming social security systems in an ageing world. In line with the UN’s Sustainable Development Goals, our key policy recommendation is that future social security reforms be re-directed towards a greater emphasis on non-contributory pension programs that can provide a much-needed safety net for older people. These will be the most important structures to deliver the SDGs, especially for emerging economies.

Aging Population and its Impacts on Fiscal Sustainability, by Naoyuki Yoshino, Chul Ju Kim, and Pitchaya Sirivunnabood.

Abstract: The world is in the midst of demographic change, with varying degrees, towards population aging. Though mixed trends were demonstrated in the G20 community, it is projected that most G20 economies would experience a significant degree of population aging. The impact of population aging is enormous and multifaceted i.e., deteriorating fiscal balance, changes in patterns of saving and investment, shortage in labor supply, lack of adequate welfare system, particular in developing economies, a possible decline in productivity and economic growth, and ineffectiveness of macroeconomic policy. This policy brief proposes policy recommendations, covering comprehensive structural reforms, public finance reforms, and reform of public and private pension schemes.

Work Capacity and Socially Sustainable Public Pension System in Aging Societies, By Junghyun Kwon, Taesuk Lee, and Serena Rhee.

Abstract: This brief assesses the work capacity in South Korea and U.S. and draws policy implications. We find two facts: One is that there exists substantial amount of additional work capacity overall and the other is that there is a considerable heterogeneity in work capacity related with differences in educational background. Given these findings, we need to encourage seniors to adjust themselves by providing sufficient time and benefit options when designing socially sustainable public pension schemes. In addition to gradual public pension reforms, we recommend complementary targeted welfare programs, policies to boost the demand for aged workers, and strengthened safety regulations.

T20 Summit

This year, the T20 Summit will convene on 26-27 May in Tokyo, where experts from the world’s leading think tanks will unveil their policy recommendations for consideration during the G20’s Leaders Summit, to address pressing global challenges and deliver more inclusive, sustainable growth.

(Source: T20 Japan)

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