NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, February 10, 2015

Today, the Center for Financial Inclusion at Accion (CFI) and HelpAge International released Aging and Financial Inclusion: An Opportunity, a report that examines the unmet financial needs of the rapidly growing global aging population, particularly in the developing world. The purpose of this report is to highlight the barriers and opportunities related to financial services in older age and throughout the aging process, a relatively neglected area of study.

Within 25 years, the percent of the world’s population over age 60 will nearly double and aging is advancing particularly fast in developing countries. While older people at the base of the pyramid have varied and unpredictable incomes, financial services can facilitate their income strategies. Some financial services providers, however, are cautious about their engagement with older people because of concerns about financial capability, income instability, and physiological issues. At the same time, social pensions, while quickly growing in reach, are currently inadequate to meet the needs of older people in emerging markets. The report encourages policymakers and providers to consider older people as an increasingly important market segment whose needs are differentiated from those of younger adults and to seek solutions to meet their financial needs.

Effective solutions will be found in cooperation between the public and private sector, in creative design of financial services, in early interventions to encourage participation in long-term saving and contributory pensions, and in a continued commitment to knowledge-sharing between the financial services sector, older persons’ associations, and support organizations on issues that may arise. These may include ensuring that effective monitoring and resolution mechanisms are in place in the event of mistakes, and to mitigate or control abuse; ensuring that products are easily understood and accessible; and that older people, indeed all clients, are able to make financially sound product choices

“Within 15 years, there will be 1.3 billion people over age 60 in the world,” says Elisabeth Rhyne, Managing Director of CFI. “This reality presents challenges, but it also signals market opportunities that the financial sector has the potential to address. Taking action now—such as facilitating social pensions, linking pensions with other financial instruments, and working closely with older people—can help societies and individuals prepare.”

“Millions of older people in developing countries work well into their later years with unpredictable and low incomes,” says Kate Bunting, CEO of HelpAge USA—the U.S. affiliate of HelpAge International. “Financial service providers can be part of the solution to help older people manage their finances and have a more secure income. Meeting the financial needs of older people is not only the right thing to do—it’s also a smart investment.”