Global aging preparedness index

Global aging preparedness index

Which countries are preparing for old age?

The Global Aging Preparedness Index (or GAP Index) aims to provide a comprehensive assessment of the progress that countries are making in preparing for global ageing, and particularly the “old-age dependency” dimension of the challenge. The GAP Index covers twenty countries, including most major developed countries and a selection of economically important emerging markets for which adequate data were available. Its projection horizon extends through the year 2040 in order to capture the full impact of the demographic transformation now sweeping the world.

The overall GAP Index consists of two separate subindices

  • fiscal sustainability index - looking at projections of public old-age benefit spending, including both pensions and health benefits. It takesinto account the differing fiscal room that countries have to accommodate their growing old-age dependency burdens by raising taxes, cutting other spending, or borrowing. It also considers the degree of elderly dependence on public benefits in different countries, which may be a crucial factor in determining how politically easy or difficult it will be to enact new cost-cutting reforms or to follow through on reforms that have already been enacted but not yet phased in
  • income adequacy index - trends in the living standard of the elderly relative to the nonelderly in each country based on projections that factor in the impact of changes in public benefit programs, private pension provision, and labour-force participation rates. It also includes indicators that measure the robustness of old-age safety nets and family support networks, which play a crucial role in retirement security in many emerging markets and some developed countries
The GAP Index reveals that most countries are doing much better on one dimension of ageing pre-paredness than the other, suggesting that today’s retirement policies often entail a worrisome trade-off between fiscal sustainability and income adequacy. Three of the seven highest-ranking countries on the fiscal sustainability index (Mexico, China, and Russia) are among the seven lowest-ranking countries on the income adequacy index. Four of the seven highest-ranking countries on the income adequacy index (the Netherlands, Brazil, Germany, and the UK) are among the seven lowest-ranking countries on the fiscal sustainability index.