Cost of Providing for Elderly To Rise Steeply

YERUSHALAYIM -

As Israel’s population grows older over the coming decades, the cost of providing for retirees will increase sharply, according to a Finance Ministry report quoted in Haaretz on Tuesday.

“In the next two decades we expect an increase in public spending, mainly due to the aging of the population — an increase that will be significant but moderate by international standards,” said Assaf Geva of the economics and research division, which studied demographic and budget trends from the years 2009 through 2059.

The study found that, barring unforeseen demographic changes or raising of the retirement age, the cost of old-age allowances as a percentage of gross domestic product will soar to 52% in the next three decades, and by 71% over the next five decades.

Like other developed countries, Israel’s population is aging as life expectancies rise and birthrates fall. The burden projected to fall on working-age people will be commensurately greater. The proportion of the population over age 65 will rise from 11% in 2014 to 14% in 2030 and 17% in 2059, if current rates continue.

An encouraging aspect of the data is that Israel is expected to be in a better position to cope with the problem than other developed economies because its population is aging more slowly and the benefits it pays are less generous.

While old-age allowances will boost total public sector spending as a percent of GDP by 1.3%, in Norway the rise will be 13.4%; Canada, 8.7%; Japan, 8.5%; and in the United States by 5.5%.