Are the Pension Systems of Low Fertility Populations Sustainable?

Part of the The Springer Series on Demographic Methods and Population Analysis book series (PSDE, volume 39)


The decline in fertility levels to below replacement level is a common trend that will lead to population decline and reduce the pressure on the environment and on natural resources. On the other hand, it will also cause population aging and higher pension burdens of pay-as-you-go systems. Funded pension systems transfer cohorts’ saving to consumption and their pension burdens are invariant to fertility change. Comparing the difference between the pension burdens of the two systems in certain periods could provide relevant information to the decision on whether or not to establish funded pension systems. A time-based cohort old-age dependency ratio is proposed in this chapter, which measures the pension burden of a funded system and is comparable to that of a pay-as-you-go system. This time-based cohort old-age dependency ratio can be computed for all the countries and areas of the world, using only demographic data. Examples are given for China, Japan and the Republic of Korea.


Pension systems Dependency ratios Period Cohort 


  1. Anderson, M., Tuljapurkar, S., & Li, N. (2001). How accurate are demographic projections used in forecasting pension expenditure? In T. Boeri et al. (Eds.), Pensions: More information, less ideology (pp. 9–29). Boston: Kluwer Academic Publisher.CrossRefGoogle Scholar
  2. Borsch-Supan, A. (2001). What we know and what we do not know about the willingness to provide self-financed old-age insurance. In T. Boeri et al. (Eds.), Pensions: More information, less ideology (pp. 113–136). Boston: Kluwer Academic Publisher.CrossRefGoogle Scholar
  3. De Santis, G. (2003). The demography of an equitable and stable intergenerational transfer system. Population-E, 58, 587–622.CrossRefGoogle Scholar
  4. Goldstein, J. R., Kreyenfeld, M., Jasilioniene, A., & Orsal, D. K. (2013). Fertility reactions to the “Great Recession” in Europe: Recent evidence from order-specific data. Demographic Research, 29, 85–104.CrossRefGoogle Scholar
  5. Human Mortality Database. (2013). University of California, Berkeley (USA), and Max Planck Institute for Demographic Research (Germany). Available at or Data downloaded on April 2013.
  6. Lee, R., & Mason, A. (2011). Population aging and the generational economy, a global perspective. Cheltenham: Edward Elgar Publishing Inc.CrossRefGoogle Scholar
  7. Lee, R., Anderson, M., & Tuljapurkar, S. (2003). Stochastic forecasts of the social security trust funded. CEDA chapters
  8. Pollard, J. (1973). Mathematical models of the growth of human population. Cambridge: Cambridge University Press.Google Scholar
  9. Schmertmann, C. P. (1992). Immigrants’ ages and the structure of stationary populations with below-replacement fertility. Demography, 29, 595–612.CrossRefGoogle Scholar
  10. Schoen, R., & Kim, Y. J. (1996). Stabilization, birth waves, and the surge in the elderly. Mathematical Population Studies, 6, 35–53.CrossRefGoogle Scholar
  11. United Nations. (2013). World population prospects: The 2012 revision. New York: United Nations.Google Scholar
  12. World Bank. (1994). Averting the old age crisis. Oxford: Oxford University Press.CrossRefGoogle Scholar

Copyright information

© Springer International Publishing Switzerland 2016

Authors and Affiliations

  1. 1.United Nations Population DivisionUnited NationsNew YorkUSA

Personalised recommendations