Working Paper（25-018E）Aging, Population Projections, and Public Pensions

This paper investigates the long-term implications of demographic aging for public pension sustainability, using population projections from both international and national sources. Drawing on the 2024–2100 United Nations World Population Prospects (UN WPP) as well as forecasts from the Social Security Administration (SSA), U.S. Census Bureau (CB), Congressional Budget Office (CBO), and Japan’s National Institute of Population and Social Security Research (IPSS), I document substantial cross-country variation in projected old-age dependency ratios. In addition, there is a large range of forecasts produced by different assumptions on fertility and immigration. I calculate a key forward-looking metric—the number of full retirement age (FRA) postponements required to maintain the 2023 dependency ratio through 2100. I show that advanced economies like Japan, having aged much earlier, face more modest required adjustments, while many middle-income countries will need much sharper policy shifts. I further demonstrate the sensitivity of unfunded pension liabilities to alternative demographic projections in the U.S. and Japan, and quantify the impact of Japan’s 2004 macroeconomic slide reform on long-run fiscal sustainability. The results underscore the importance of proactive pension reform—particularly in developing economies entering demographic transition with limited time and institutional and fiscal capacity.

Keywords: Aging, population projections, old age dependency ratios, postponements of retirement age, unfunded obligations

JEL: E62, E63, H6