A shocking projection indicates that the population of Paraguay aged 60 and over will nearly double in the next 25 years, from the current 803,000 to 1,594,000 by 2050. Demographer Claudina Zavattiero recently issued this warning during a webinar co-hosted by the Ministry of Labor, Employment, and Social Security (Mtess) and the Inter-American Center for Social Security Studies (Ciess). She expressed concern that this rapid transition to an aging society will lead to increased social costs in areas such as healthcare, caregiving, housing, and pensions, placing severe pressure on the social security system.

Dr. Zavattiero emphasized, "It is no longer possible to expect a young population structure, and the aging process will accelerate." The population aged 60 and over, which accounted for only 6% of the total population in 1950, has now increased to 13% and is projected to reach 22% by 2050. In contrast, the proportion of the population aged 30-59, the mainstay of economic activity, has slightly increased from 22% to the current 35% during the same period but is expected to decline relatively with the future increase in the elderly population.

Fragile Pension System, Concerns about Increased Burden on Future Generations

An even more critical issue is that only 2 out of 10 people aged 18 and over currently contribute to the pension system. With only 1 in 10 having savings plans for the future, serious doubts are being raised about the sustainability of the social security system in an aging society.

The results of the 'Long-term Social Protection Survey' presented by Dr. Zavattiero further deepen these concerns. 25.7% of Paraguayans aged 15 and over responded that they plan to rely on their children for retirement funds, and 24.8% stated they have no idea how they will manage their old age. Only 17.3% plan to prepare for retirement with their own savings, 14.3% expect to live on national pensions or social security, and a mere 11.1% intend to depend on rental income. This suggests that a significant number of future generations may face an uncertain future without adequate retirement preparation.

Chilean Economist: "Build a Sustainable Pension System Based on Developed Countries' Experiences"

Meanwhile, Chilean economist Nicolás Stark, who participated as a panelist in the webinar, stated that Chile is also facing a serious challenge to the sustainability of its pension system due to rapid aging. In Chile, the proportion of the population aged 65 and over has already exceeded 14%, surpassing regional and global averages. Economist Stark identified low birth rates and a rapid increase in life expectancy as the main reasons for this situation. The life expectancy at age 65 for Chilean men is over 22 years, and for women, it exceeds 30 years.

Economist Stark presented lessons for the sustainability of the pension system, including securing financial sustainability, ensuring intergenerational equity, and resolving imbalances between benefits and contributions through various mechanisms. He emphasized, "No generation should face a significant imbalance between benefits and contributions," and stressed the importance of building a sustainable pension system from a long-term perspective, based on the experiences of developed countries.

Pension System Reforms Delayed, Urgent Need for Proactive Government Policies

The low rate of public pension contributions and the financial difficulties of the main pension management institutions, the Social Security Institute (IPS) and the Ministry of Finance, require the Paraguayan government to develop proactive strategies to strengthen the social security system. The government enacted a pension law that includes the establishment of a Social Security Council for pension system reform, but the council has not yet functioned properly due to delays in the appointment of labor representatives. The IPS Retirees and Pensioners Association has nominated interim representatives, which has further delayed the appointment of pension supervisors.

Experts warn that the challenges posed by Paraguay's aging society extend beyond simple demographic shifts and could lead to various social problems, including a decline in overall economic productivity, increased healthcare and welfare costs, and intensified intergenerational conflict. Therefore, the government must promptly normalize the Social Security Council, gather the opinions of stakeholders, and develop practical reform measures to build a sustainable and fair pension system. Now is the time for proactive policy efforts to reduce the burden on future generations and ensure a stable old age for all citizens.

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