Costs and Potential Funding of Expanded Public Pension Coverage in Asia

24 Pages Posted: 28 Apr 2020

See all articles by Peter Morgan

Peter Morgan

ADBI

Long Q. Trinh

Asian Development Bank Institute

Date Written: November 2019

Abstract

Public pension burdens in most emerging Asian economies are still relatively small. However, there are a number of reasons to believe that they will increase markedly in the coming years. First, many Asian economies will face rapidly ageing populations, which will raise pension and other old‐age‐related spending dramatically. Second, as economies develop, political pressures to expand the coverage of public pensions and raise pension benefits will likely increase. The first objective of this paper is to identify the potential fiscal burden of public pensions in 23 emerging Asian economies, based on econometric models and forecasts of GDP and demographic trends. Using two different methodologies yields estimated increases in the average share of public pension expenditures in GDP of 1.0 percentage point and 3.6 percentage points by 2030 compared with current levels. We believe the latter estimate is more realistic. The second objective is to recommend policies to provide adequate funding for public pension needs, including enhancing the efficiency of social insurance programs, improving the balance of revenues and expenditures, implementing more explicit fiscal rules and frameworks, and establishing stronger fiscal surveillance at the national and regional levels.

Suggested Citation

Morgan, Peter J. and Trinh, Long Q., Costs and Potential Funding of Expanded Public Pension Coverage in Asia (November 2019). Asian‐Pacific Economic Literature, Vol. 33, Issue 2, pp. 3-26, 2019, Available at SSRN: https://ssrn.com/abstract=3586903 or http://dx.doi.org/10.1111/apel.12274

Peter J. Morgan (Contact Author)

ADBI ( email )

Kasumigaseki Building 8F 3-2-5
Kasumigaseki, Chiyoda-ku
Tokyo, 100-6008
Japan

Long Q. Trinh

Asian Development Bank Institute ( email )

Kasumigaseki Building 8F
3-2-5, Kasumigaseki, Chiyoda-ku
Tokyo, 100-6008
Japan

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