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Pension crises “will start to bite” over the next decade in super-ageing societies, according to the World Economic Forum’s (WEF) Global Risks Report 2025.
Super-ageing societies feature as a key theme in this year’s edition, which is linked to risks such as inequality and societal polarisation. A super-ageing society is when over 20 per cent of a country’s population is over 65 years old. Several countries have already exceeded that mark, such as Japan, Italy and Germany.
However, many more countries across Europe and Eastern Asia are projected to do so by 2035. Globally, the number of people aged 65 and older is expected to increase by 36 per cent, from 857 million in 2025 to 1.2 billion in 2035.
“Over the next decade the pensions crises and their implications will start hitting home in super-ageing societies, as it becomes clear that current state pension systems were designed for a much younger demographic with fewer years of retirement that needed funding,” the report noted.
However, the report identified that the second pillar of pensions will also struggle as a result of super-ageing societies, in addition to first pillar state pensions. This is because many countries are moving away from DB systems to DC systems, putting the onus on individuals to save for and manage their retirement income.
“For many people, this can be challenging as they may have insufficient income, lack the requisite financial understanding, or fail to make good early decisions about savings and retirement.
“As dependency ratios rise, fewer people will be contributing to employer and private pensions schemes relative to the number of people whose retirements need funding, and with the length of those retirements rising,” the report stated.
A common solution for alleviating the pensions crisis in super-ageing societies is raising the statutory retirement age, a policy already adopted by several countries.
However, the WEF warned that attempts to do this face resistance from voters, a rising proportion of whom are themselves close to retirement.
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