Global Pension Systems Face Sustainability Crisis Due to Demographic Shifts
Global pension systems are facing a significant structural threat driven by increasing life expectancy and declining birth rates. According to the 2026 Marsh CFA Institute Global Pension Index (MCGPI), most covered pension systems have fertility rates below replacement levels, while life expectancy at age 65 in developed regions has risen by over 50% since 1950. This demographic shift creates mounting liabilities for defined-benefit plans and increases the risk of retirees outliving their savings in defined-contribution models. The crisis is particularly acute for pay-as-you-go systems, where a shrinking workforce must support an expanding elderly population. In the United States, the Old-Age and Survivors Insurance Trust Fund is projected to exhaust its reserves by the fourth quarter of 2032. To combat these growing deficits, pension funds are being forced to rethink investment strategies and potentially increase exposure to riskier assets to meet long-term payout obligations.
Topics: demographic crisis global pension index longevity risk pension fund liabilities