WP 48 - Population ageing in the Netherlands: Demographic and financial arguments for a balanced approach



Wiemer Salverda

cohort-OADR is the relationship between the cumulative number of years that the same people all
born in the same year live on average beyond the age of 65 compared to the previous 45-year
period between the ages of 20 and 65. This cohort-OADR is estimated on the basis of the remaining
life expectancy at 20 and at 65 years of age multiplied by the chances at birth of reaching that age.
For the future, it is assumed that the chances of survival for 20-year-olds will remain constant and
increase for 65-year-olds every five years by 0.5% for men and 0.25% for women respectively. The
cohort-OADR best reflects increasing individual life expectancy (see also Turner, 2004, 127).

Figure 2 shows the OADR value using both approaches. The calendar-OADR (the grey area) has
risen gradually over a long period, almost doubling over the last century from 12 to 23%. For the
years ahead, a dramatic acceleration is projected toward a peak of 44% by 2040. By contrast, the
line in the figure gives the cohort-OADR according to birth year. Compared with the calendar-
based ratio (15%), it is already high at 27% for those born in 1951-55 (first available data) and who
will begin to retire in 2015; the cohort-OADR value for birth year 1973 (people who will turn 65 in
2038) is 29%, only a little higher. For those born today, this value is 34%. The remaining increase up
to 39% extends to the cohort that will make its entry into the world in 2050 and that will not be
turning 65 until 2115. Therefore, on a cohort basis, population ageing in the coming decades is very
minor compared to the calendar approach. We shall now see how critical this difference is when it
comes to funding the ageing population.

14


AIAS - UvA



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