Although people are living longer, there is no discernible pattern about the quality of life in an increasing lifespan. This restricts our capacity to predict and prepare for the consequences of population ageing. Accordingly, we propose a population ageing indicator that combines demographic and disability prevalence data through a characteristics approach and explore different scenarios to account for uncertainty in life quality projections. Our results, available for 186 countries, show that countries that rank older under conventional chronological ageing measures may rank younger under our qualitative measure. Additionally, we find substantial differences in our projections depending on different health assumptions, demonstrating the risk of using ageing indicators that make implicit assumptions about health characteristics.

The paper develops a simple, integrated methodology to project public pension cash flows and healthcare spending over the long term. We illustrate its features by applying it to the LAC5 (Argentina, Brazil, Chile, Colombia and Mexico), where public spending pressures are expected to increase significantly over 2015-50 due to demographic trends and rising healthcare costs. We simulate alternative pension reforms, including the transition from a defined benefit to a defined contribution pension system and the fiscal burden of a minimum guaranteed pension under the latter. We also analyze public healthcare outlays in the LAC5, which is likewise expected to increase significantly over 2015-50 due to aging and the so-called excess cost growth factor of healthcare services, showing that curbing the evolution of the latter (e.g., through enhanced competition in the healthcare sector) could aid in containing spending pressures. Despite its simplicity, the methodology yields projections that compare well with other approaches. It therefore provides a good benchmark for assessing alternative reform scenarios, particularly in data-constrained countries.

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