GOVERNMENTS IN developed countries are being urged to cut back on their pension and welfare benefits as ageing populations push public spending to grow at double the rate previously forecast to 2050, according to an international research centre. Public retirement spending may eat up an extra 12 per cent of gross domestic product (GDP), leaping from 11 to 23 per cent, by 2050 - nearly double the rate of government projections, a report conducted by the Centre for Strategic and International Studies (CSIS) based in Washington found. The problem is especially acute in some European countries and is spreading to East Asia rapidly due to a significant decline in its birth rate. Entitled Global Retirement Crisis: The Threat to World Stability and What to Do about It, the report is a collaboration with Citigroup Asset Management. It said that in Greece and Spain, the total public pension and health spending was expected to rise to 44 per cent and 37 per cent of GDP by 2050 respectively. In France, health and pension payouts are to rise by 15 per cent of GDP in that time. The problem is also emerging in East Asia, where birth rates are declining. In Hong Kong, for example, the proportion is forecast to rise to 29 per cent from 11. Low birth rates also mean a shrinking workforce. By mid-century, the working-age population in Italy is expected to drop by 42 per cent, compared to 36 per cent fewer in Germany and 28 per cent in Japan. Richard Jackson, author of the report and an adjunct fellow at CSIS, said: 'Gone are the days when we could effortlessly make benefit promises and leave it to future politicians to figure out how to pay for them.' The report also indicated shrinking workforces, slow wage growth and stagnant after-tax living standards would continue to add to the burden on public spending. Citing United Nations figures, the report said there would be two working adults for every retired person by 2050 with the ratio for working-age adults to elderly in the developed world dropping from 4.5 to one today to just 2.2 to one by then. The actual ratio could be lower because not all younger adults work and most older workers retire before the age of 65. The report also said the International Monetary Fund had forecast that at least one country, Italy, will see its ratio dip below one by 2050, meaning more people will be collecting benefits than paying taxes. This support ratio in Japan is expected to drop from 1.5 now to one by 2050, 1.4 to one in France and 1.2 to one in Germany by that time. The average life span in Europe is projected to increase by 3.5 years compared to 8.9 years in Japan. Reform was needed most urgently in these countries since their retirement systems were the most expensive and the aging trend was the most severe, the report concluded. It recommended a funded system for retirement, similar to the Mandatory Provident Fund implemented in Hong Kong since 2000. The report said such a system could finance any given level of benefits at a lower contribution rate than a pay-as-you-go system. The report noted the system had many potential advantages, including higher national savings and a higher return. Also, governments should step up measures to scale back the old-age benefit system, increase adult employment rates, encourage later retirement and reward families for raising children. Some countries are raising the eligibility age for pension handouts so as to offset the longer life expectancy and are restricting access to early retirement benefits.