> **来源：[研报客](https://pc.yanbaoke.cn)** # Future-Proofing the Longevity Economy: Innovations and Key Trends WHITE PAPER MARCH 2025 # Contents Foreword 3 Executive summary 4 Introduction 5 1 Building resilient public retirement systems 8 1.1 The case for action 9 1.2 Understanding the challenges 9 1.3Spotlights on innovation 11 1.4 A path forward 13 2 From accumulation to decumulation 14 2.1 The case for action 15 2.2 Understanding the challenges 16 2.3Spotlights on innovation 18 2.4 A path forward 20 Feature: Technology and AI in the longevity economy 21 3 Role of employers in financial well-being 23 3.1 The case for action 24 3.2 Understanding the challenges 25 3.3Spotlights on innovation 26 3.4 A path forward 28 Feature: Extreme heat, climate change and the longevity economy 29 4 Economics of caregiving and long-term care 31 4.1 The case for action 32 4.2 Understanding the challenges 32 4.3Spotlights on innovation 34 4.4 A path forward 36 Feature:The future of the longevity economy 37 5 Pathways for economic growth 39 5.1 The case for action 40 5.2 Understanding the challenges 41 5.3Spotlights on innovation 42 5.4 A path forward 44 Actions for impact 45 Conclusion 49 Contributors 50 Endnotes 53 # Disclaimer This document is published by the World Economic Forum as a contribution to a project, insight area or interaction. The findings, interpretations and conclusions expressed herein are the result of a collaborative process facilitated and endorsed by the World Economic Forum but whose results do not necessarily represent the views of the World Economic Forum, nor the entirety of its Members, Partners or other stakeholders. In this paper, many areas of innovation have been highlighted with the potential to support the longevity economy transition. The fact that a particular company or product is highlighted in this paper does not represent an endorsement or recommendation on behalf of the World Economic Forum or Mercer, and should not be relied on for such purposes. # Foreword Haleh Nazeri Lead, Longevity Economy, World Economic Forum Graham Pearce Senior Partner, Global Defined Benefit Segment Leader, Mercer The world appears increasingly fragmented, but one universal reality connects us all - ageing. Across the world, people are living longer than past generations, in some cases by up to 20 years. This longevity shift, coupled with declining birth rates, is reshaping economies, workforces and financial systems, with profound implications for individuals, businesses and governments alike. As countries transform, the systems that underpin them must also evolve. Today's reality includes a widening gap between healthspan and lifespan, the emergence of a multigenerational workforce with five generations working side by side, and the need for stronger intergenerational collaboration. One of the most important topics to consider during this demographic transition is the economic implications of longer lives. This paper highlights five key trends that will influence and shape the financial resilience of institutions, governments and individuals in the years ahead. It also showcases innovative solutions that are already being implemented by countries, businesses and organizations to prepare for the future. While the challenges are significant, they also present an opportunity to develop systems that are more inclusive, equitable, resilient and sustainable for the long term. This is a chance to strengthen pension systems and social protections, not only for those who have traditionally benefited, but also for those who were left out of social contracts the first time. We are grateful to our multistakeholder consortium of leaders across business, the public sector, civil society and academia for their contributions, inputs and collaboration on this report. We look forward to seeing how others will continue to build on these innovative ideas to future-proof the longevity economy for a brighter and more prosperous tomorrow. # Executive summary The world is at a pivotal moment in its demographic transition. More than one in four people worldwide now reside in a country where the population has already peaked in size, signalling a profound shift in labour markets and economic systems. Meanwhile, global life expectancy has increased significantly over the past century; however, this progress masks stark disparities – life expectancy can exceed 80 years in high-income countries yet remain below 60 in some low-income nations. As birth rates decline, some of the world's most advanced economies would need to at least double their productivity growth rates to sustain historical improvements in living standards. These demographic shifts intersect with two other defining transitions of our time: the rapid acceleration of technological advances and artificial intelligence, as well as the escalating impact of climate change and extreme heat. Taken together, these forces create both an urgent challenge and an unprecedented opportunity to rethink financial resilience and economic participation across all life stages. Governments, businesses and civil society must act now to build systems that enable people of all generations to thrive. Building on the Longevity Economy Principles, this publication synthesizes five key trends shaping financial resilience and highlights scalable innovations that can be adapted to different national and sectoral contexts. # Building resilient public retirement systems As populations age, public retirement systems face growing challenges with regard to financial sustainability. # From accumulation to decumulation The global shift from defined benefit to defined contribution plans places greater responsibility on individuals to manage their own financial security. # Role of employers in financial well-being Supporting financial well-being is not just an investment in employees - it is an investment in organizational resilience and success. # Economics of caregiving and long-term care The growing demand for care services requires urgent policy and workplace solutions to support both carers and care recipients. # Pathways for economic growth Flexible social systems are essential for enabling individuals to navigate economic transitions, which in turn allows them to continue contributing meaningfully to long-term economic growth. The question is not whether change will come – but whether stakeholders will shape it or be forced to react to it. The "future" of the longevity economy is not in some distant moment - it is already here. Around the world, innovative solutions are emerging to meet the challenges of this demographic transition, and these can be scaled, adapted and integrated into broader financial and social frameworks. By investing in resilient financial systems, inclusive policies and sustainable support structures, stakeholders across the public and private sectors can shape a longevity economy in which people of all ages can thrive. Without bold action, the world risks financial instability, overwhelmed care systems and a workforce unprepared for the future. The question is not whether change will come – but whether stakeholders will shape it or be forced to react to it. This report serves as both a roadmap and a call to action – empowering decision-makers to take bold steps in reimagining financial resilience for generations to come. Society has an opportunity to proactively address the seismic demographic transition and co-design an environment in which both young and old can flourish, benefiting all. # Introduction # Demographic shifts are reshaping the world in profound ways, driving unprecedented changes in social and economic systems. As global populations age and birth rates decline, society must urgently adapt to the changing realities. All regions of the world will be affected by this seismic demographic transition. The statistics are sobering and highlight the urgency of this shift: - By 2080, individuals aged 65 or older are projected to outnumber children under the age of 18.4 By 2060, Asia will have $60\%$ of the world's population aged 65 and older.5 - By 2050, the global population aged 65 and older will reach 1.6 billion, with one in six people over 65.<sup>6</sup> In Europe and North America, this ratio will rise to one in four; in some countries, such as Japan, South Korea and Italy, this ratio is projected to exceed one in three.<sup>7</sup> - By 2050, sub-Saharan Africa is projected to have a net increase of 740 million people, experiencing the fastest increase in the traditional working-age population of all regions.8 - As of 2025, one in four people reside in one of the 63 countries that have already peaked in size, accounting for $28\%$ of the world's population.<sup>9</sup> China, previously the world's most populous country, saw its population decline in 2022 for the first time in six decades.<sup>10</sup> The traditional balance between the years spent in productive employment and retirement is rapidly becoming unsustainable. For decades, the "demographic dividend" – the economic benefit resulting from a large and increasing working-age population compared to retirees – has helped fuel growth in many nations. However, as life expectancy increases and birth rates decline, countries now face the dual challenge of maintaining the resilience of economic systems while ensuring younger generations are not overburdened with future financial strain. These demographic changes not only necessitate a re-evaluation of economic, retirement, healthcare and care systems but also influence individuals' financial pathways and the role of employers in supporting a multistage life, creating a complex web of interdependencies that must be addressed holistically. Yet society as a whole is largely unprepared for this significant demographic shift, either due to inadequate savings, lack of career flexibility or outdated pension systems with mandated retirement ages. In many regions, particularly in low- and middle-income countries, barriers including limited job opportunities, economic instability and inadequate infrastructure can add further complications. # Reframing the demographic dividend The idea that an ageing society is a burden, and will deplete resources and tax social services, needs to be reframed: in a multistage life, everyone can contribute and benefit at different times depending on their circumstances. The challenge, then, is creating systems that allow people to contribute to society at various stages of life, whether that means transitioning into entrepreneurial ventures, shifting careers or engaging in informal care provision, while also increasing the number of years in which people are healthy enough to make a positive contribution to the economy. Facilitating these transitions, ensuring financial security at each stage and promoting healthy ageing unlocks opportunities for all generations to thrive, while at the same time increasing the overall size of the economy. An inclusive and financially resilient future is not just about making adjustments to existing systems, but about rethinking how individuals can be supported in their economic roles over time. Whether what is needed is providing access to lifelong learning, supporting carers or ensuring adequate retirement savings, the future of work (and life) – and the financial systems that support it – needs to be flexible and inclusive. The world is at a pivotal point, one where the longevity economy offers immense potential. Society has an opportunity to proactively address this seismic demographic transition and co-design an environment in which both young and old can flourish, benefiting all. A profound public debate about the future of the longevity economy – in which a sound, resilient pension system is just one aspect – has been largely absent from global discourse. This paper aims to promote this dialogue and bring together stakeholders from the public and private sectors and civil society to collaboratively explore innovative solutions to future-proof the longevity economy. NOTE: Medium-fertility scenario. Only countries and areas with a population of at least 1 million are shown in the line chart. The boundaries, colours, denominations and any other information shown on the map do not imply any judgement on the legal status of any territory or any endorsement or acceptance of such boundaries. SOURCE: United Nations Department of Economic and Social Affairs. (2024). World population prospects 2024. https://population.un.org/wpp/ # Innovations and emerging trends of the longevity economy This paper builds upon the World Economic Forum's 2024 insight report, *Longevity Economy Principles: The Foundation for a Financially Resilient Future*. The sections and focus areas outlined below investigate the multifaceted challenges and the opportunities for innovations to support the world through this significant demographic transition: # Building resilient public retirement systems: This focus area tackles the urgent need to reform public retirement systems in light of demographic changes, ensuring they are financially sustainable and inclusive, and that they meet the needs of an increasingly population with diverse requirements. - From accumulation to decumulation: With people living longer, traditional retirement systems must be revamped to ensure that retirement savings can sustain individuals throughout their lifetimes. This section examines innovative solutions for turning retirement savings into reliable lifetime income and focuses on the "decumulation" phase of retirement. # Role of employers in financial well-being: Employers can play a crucial role in enhancing financial well-being through programmes that provide support for employees at all stages of their lives. Economics of caregiving and long-term care: Providing care, for both children and older relatives, disproportionately affects women and has long-term implications for financial stability. This section highlights how systems must evolve to support caring roles and address gaps in savings and income. - Pathways for economic growth: Examining how financial systems must adapt to support people through different life stages, career changes and caring responsibilities, this focus area explores solutions to help build both financial resilience for the individual and long-term growth for the economy. Many reports on longevity naturally emphasize health as an important pillar. This paper complements that perspective by focusing on financial resilience, highlighting the systemic trends and innovations that can enable individuals to thrive. Additionally, the paper explores how broader trends and challenges are reshaping the longevity economy. Technology and artificial intelligence (AI) are transforming industries. At the same time, extreme heat and other climate-related challenges are already affecting vulnerable sectors of society. Finally, looking ahead to the future of the longevity economy, the paper examines how evolving societal attitudes to ageing, work, finance and health can create new opportunities for every generation. There exists a myriad of innovative solutions that are ready to spread, scale and adapt to different national and sectoral contexts. # Building towards a more inclusive and financially resilient future The solutions outlined in this paper provide a blueprint for how societies can embrace the longevity economy. The transition from a linear to a varied multistage life approach will not only help improve quality of life and financial security for individuals but also harness the potential of an increasingly older workforce to fuel innovation and economic growth. The following sections explore achievable strategies and best practices, offering a vision for the future in which financial pathways are designed to support individuals at every stage of their life - helping to ensure not just financial resilience but also fulfilling careers and meaningful participation in society throughout a person's lifespan. In many ways, the "future" is already here, as there exists a myriad of innovative solutions that are ready to spread, scale and adapt to different national and sectoral contexts. The goal of this work is to develop a world in which purposeful contribution, meaningful connection and financial resilience are integrated throughout all life stages, creating new opportunities for engagement, economic growth and collective well-being. # TABLE 1 Summary of the six principles of the longevity economy # Ensure financial resilience through important life events Nearly $40\%$ of people globally face financial instability after unplanned career interruptions, including breaks in their careers, illness or unexpected retirement.[11] Public-private collaboration is crucial to support individuals navigating these challenges. # Provide universal access to impartial financial education Only $33\%$ of the global population is deemed financially literate, $^{12}$ contributing to wealth inequalities that are in turn strongly correlated with life expectancy inequalities. Comprehensive, impartial financial education enables individuals to make informed financial decisions. # Prioritize healthy ageing as foundational for the longevity economy Around one-fifth of life is expected to be lived with illness, $^{13}$ with $80\%$ of adults in developing countries concerned about the cost of medical expenses. Equitable access to health services can facilitate well-being for both the individual and broader society. $^{14}$ # Evolve jobs and lifelong skill-building for a multigenerational workforce Globally, up to $25\%$ of individuals aged 55 and older wish to work in old age but face barriers in finding opportunities.[15] Demographic shifts and technology innovations require jobs and skill-building to adapt and evolve, enabling individuals to extend their working years as desired. # Design systems and environments for social connection and purpose Social connection is integral to healthy longevity. Socially isolated older adults have a higher risk of poor health and earlier death. Designing systems and environments for social connection can mitigate these impacts. # Address longevity inequalities, including across gender, race and class The benefits of longevity are not distributed equitably. Promoting pay and pension equity, as well as support for informal carers, are some of the crucial steps that could deliver necessary change in this area. 1 # Building resilient public retirement systems Modernizing public retirement systems to be more resilient is not only a moral imperative but also a critical step towards achieving economic stability and social cohesion. As populations age and lifespans increase, retirement systems worldwide face mounting challenges to remain sustainable and inclusive. Without significant reforms, these systems risk insolvency, exacerbating poverty among older adults and placing undue strain on younger generations. # 1.1 | The case for action Resilient systems can be achieved through innovative reforms that expand coverage, ensure equitable contributions and align benefits with long-term demographic realities. # Resilient public retirement systems are essential for economic stability and intergenerational equity. Public retirement systems are a cornerstone of economic security. As life expectancies increase and birth rates decline, these systems face unprecedented challenges. Addressing these challenges requires innovative solutions that ensure financial stability, intergenerational equity and inclusion for all workers, particularly in informal sectors. - By 2050, the global population aged 65 and older will more than double, reaching 1.6 billion people, creating unprecedented pressure on retirement systems to support longer lifespans.[16] - More than half the world's workforce operates in informal economies, with no access to pensions or retirement savings, leaving millions unprepared for financial security in old age.[17] - By 2060, governments globally could face deficits averaging $9.1\%$ of gross domestic product (GDP) if ageing-related fiscal policies are not reformed. Emerging markets are particularly vulnerable, with potential deficits reaching $15.9\%$ of GDP compared to $5.6\%$ in advanced economies.[18] Retirement systems vary significantly among countries in their design, funding mechanisms and reliance on private savings. Countries such as France and some northern European nations rely on taxation-based, risk-pooled state pensions, while the United States and many emerging economies expect workers to accrue their own savings through private retirement accounts. These differences shape the level of individual financial responsibility and the degree to which government intervention is necessary to ensure financial security in later life. Without robust public retirement systems, millions of retirees could face poverty, and the broader economy could suffer from reduced consumer spending and increased healthcare costs. Countries that fail to act risk growing intergenerational tensions as younger workers bear the financial burden of funding unsustainable systems. These pressures are particularly acute in emerging markets, where coverage gaps and fiscal constraints exacerbate vulnerabilities. However, there is a path forward. Resilient systems can be achieved through innovative reforms that expand coverage, ensure equitable contributions and align benefits with long-term demographic realities. By integrating public policy with private-sector innovations, countries can create sustainable systems that meet the needs of everyone. These reforms require bold action, cross-sector collaboration and a commitment to equity and sustainability.[19] # 1.2 | Understanding the challenges # Demographic shifts and fiscal strain are creating unprecedented challenges for public retirement systems. As populations age, the number of retirees relying on public pension systems is increasing dramatically, while the working-age population, whose contributions fund these systems, is shrinking. This demographic shift places immense pressure on pay-as-you-go systems in which current workers' contributions fund retirees' benefits. Combined with longer lifespans, this demographic shift means individuals will rely on pensions for more years than ever before, straining public finances. Without reforms, many systems face the risk of insolvency, jeopardizing the financial security of millions. # Transitioning from traditional pension models to more sustainable systems is complex and requires careful management. Transitions from pay-as-you-go systems to funded schemes, or from defined benefit to (collective) defined contribution plans can take years, if not decades, and necessitate compromises on intergenerational redistribution, clear communication and long-term political commitments. Gradual changes rather than abrupt shifts are necessary to help mitigate disruptions and allow individuals and organizations to adjust to new rules over time. Successful examples, such as the current transition in the Dutch occupational sector (see Section 1.3), demonstrate that with the right strategies these challenges can be effectively managed. The graph below shows the normal retirement age for men entering the labour market at age 22 with a full career across the OECD. Based on current legislation, retirement ages will increase by about two years for those now entering the workforce. SOURCE: OECD. (2023, December 13). Pensions at a glance 2023. https://www.oecd.org/en/publications/2023/12/pensions-at-a-glance-2023_4757bf20.html # Challenges with financial education, behavioural hurdles and trust can affect how well retirement systems work. In some countries, trust in public pensions is eroding due to fears of insolvency, causing workers to hesitate to participate in systems they perceive to be unreliable. Lack of financial education can disproportionately affect underserved populations, leaving them unprepared for retirement. Making sound long-term financial decisions can be challenging, especially given individuals' behavioural hurdles that encourage inertia and short-term thinking. Some tools that retirement systems can use to combat this include auto-enrolment and mandatory participation, which help people overcome inertia, as well as balancing levers such as premiums and tax incentives. By looking at public pension reform holistically, focusing on all aspects of individuals' lives, priorities and needs, systems can improve retirement outcomes and ultimately enhance financial security for all individuals. # Informal and gig workers often fall through the cracks of public retirement systems. Globally, an estimated $60\%$ of workers operate in the informal economy,[20] and the gig workforce is growing rapidly. These workers frequently lack access to contributory pension schemes, which depend on stable employer-employee relationships. The irregular nature of gig and informal work also makes it difficult to consistently contribute to retirement savings, leaving workers vulnerable in old age and perpetuating inequalities. Moreover, pension systems often lack portability, making it challenging for workers who change jobs frequently or move across borders to build adequate retirement savings. As gig and informal work reshapes labour markets, public pension systems must evolve to include those workers or risk leaving a growing segment of the population unprotected in retirement. # 1.3 | Spotlights on innovation # Canada's CPP ensures financial sustainability Canada has built one of the world's most financially resilient public retirement systems. At its core is the Canada Pension Plan (CPP), which has more than CA$675 billion of assets managed by the independent Canada Pension Plan Investment Board (CPPIB). Together, these entities ensure long-term stability and resilience against global economic and demographic pressures. The CPPIB was established in 1997 to manage CPP assets with a professional, non-political approach. Its structure and strategies have transformed Canada's retirement system into a global benchmark for sustainability.[21] - The CPP is designed to cover nearly all of the country's workers outside of the province of Quebec, which has its own plan. CPP contributors include immigrants and self-employed individuals. - The CPPIB operates at arm's length from the government, ensuring professional management free from political influence. CPP assets are allocated across global equities, infrastructure, real estate, private equity and other assets in more than 50 countries, minimizing risks tied to regional economic fluctuations. Periodic reviews help to ensure that contributions are calibrated to keep the system sustainable for at least 75 years. The CPP's predictable contribution rates (employees and employers each pay $5.95\%$ up to a yearly maximum, with workers who exceed this maximum making some additional contributions) provide stability for individuals and businesses, protecting against the volatility seen in other systems. The latest actuarial review projects financial sustainability through to at least 2090, bolstering public confidence. Canada's approach demonstrates how an independent, professionally managed investment board can safeguard retirement systems against demographic and economic challenges. By combining robust actuarial oversight with diversified global investments, the CPP ensures financial security for retirees while maintaining public confidence in the system. # The Netherlands' risk-sharing pension system The Netherlands has developed a globally recognized pension system that combines collective risk-sharing with adaptive mechanisms to ensure sustainability and equity. The Dutch system integrates public, occupational and private pensions, balancing resilience with fairness while addressing the needs of a mobile international workforce. The first pillar, the AOW (General Old Age Pension), is a universal, pay-as-you-go public pension funded through social security contributions and taxes. By linking the retirement age to life expectancy, the AOW addresses demographic pressures while ensuring basic income security for all residents. The second pillar, occupational pensions, is undergoing significant reform under the Future Pensions Act of 2023.[22] One of the options is to transition to collective defined contribution (CDC) plans. Important features include: - Introducing tools for the pension fund to design a life-cycle strategy that better matches the members' (collective) risk profile. - More transparency of pension pots and how they evolve during the accumulation phase. - Removing ex-ante redistribution effects that no longer match the modern labour market. - In the renewed system, social partners need to make a choice between two contract forms with varying degrees of risk sharing and freedom of choice: the solitary defined contribution scheme and the flexible defined contribution scheme. Both contract forms are collective defined contribution schemes and share the characteristics of personal pension pots, lifelong annuities, diversified portfolios (including alternative asset classes) and the ability to absorb demographic and financial shocks. With $90\%$ of workers enrolled in occupational pensions and a focus on intergenerational equity, the Dutch system consistently ranks highly in global pension indices. The integration of CDC plans, strong governance and relatively high levels of contributions positions the Netherlands as a leader in sustainable retirement systems. Rwanda's EjoHeza Long-Term Savings Scheme,[23] launched in 2018, is transforming retirement security by expanding financial inclusion for informal and low-income workers. Designed as a voluntary savings platform, EjoHeza (which means "a bright tomorrow" in Kinyarwanda), offers micropensions that integrate government incentives and digital accessibility to build a more resilient public retirement system. This micro-pension approach addresses the unique challenges faced by workers without access to traditional pension schemes: Low-income savers receive up to a $100\%$ match from the government on contributions, encouraging participation and boosting retirement savings. - Accessible through mobile platforms, EjoHeza simplifies registration and savings processes via digital enrolment and contributions, ensuring wide reach, especially in rural areas. - The scheme is open to all Rwandan citizens, including informal workers and children, promoting an inclusive culture of savings across generations. - Participants can make small, irregular contributions, reflecting the earning patterns of informal and low-income workers. This flexibility ensures that individuals with inconsistent incomes can still save for retirement. With millions of participants already enrolled, EjoHeza has significantly increased financial inclusion and strengthened Rwanda's social safety net. It is important to note that the level of savings is still low, suggesting the system of incentives and benefits may require continued refinement. However, its innovative approach to using technology, incentives and inclusivity provides a model for other nations seeking to build resilient public retirement systems. # Malaysia's approach to retirement system reform Malaysia's Employees Provident Fund (EPF) exemplifies the opportunities and challenges of reforming retirement systems in an emerging economy. Established as a mandatory savings scheme for formal workers, the EPF has grown to cover more than 16 million members. As Malaysia's workforce evolves and its population ages, the EPF continues to refine its approach. - The EPF allows partial withdrawals for housing, education and medical expenses, offering workers a degree of financial flexibility while retaining long-term savings for retirement. During the COVID-19 pandemic, Malaysia introduced temporary withdrawal schemes to help workers navigate economic hardship, though this raised concerns about retirement adequacy. - To strengthen retirement savings while enabling flexibility, the EPF introduced a three-account structure in 2024, allocating $75\%$ of savings for retirement, $15\%$ for conditional withdrawals (e.g. housing or education) and $10\%$ for a flexible account that members can access any time for emergencies. Early data suggests that most members are prioritizing retirement savings, with $70\%$ opting not to use the flexible account. - Recognizing the need to expand coverage, the EPF launched initiatives such as i-Saraan, which encourages voluntary contributions from informal workers through government-matching incentives. As of 2024, the government provides a $20\%$ match (up to RM500 [approximately $110] annually), leading to a $53\%$ increase in participation, from 380,000 members in 2023 to 580,000 in 2024. Malaysia is exploring reforms to improve financial literacy, expand mandatory coverage to informal and migrant workers and enhance portability for workers transitioning between formal and informal sectors. These efforts signal the government's commitment to evolving the system into a more inclusive and sustainable model. With the pursuit of legislative changes and coverage extension roadmap in place, Malaysia is poised to close the $40\%$ coverage gaps of the workforce in accessing a formal retirement scheme. Notwithstanding, coverage of the informal sector – which accounts for a significant portion of the country's workforce – remains a challenge. Malaysia's retirement system highlights the challenges of balancing flexibility with sustainability and inclusion. Its reforms offer valuable insights for countries seeking to modernize retirement systems in response to shifting demographic and economic realities. # 1.4 A path forward Ensuring the long-term resilience of public retirement systems requires proactive, adaptive strategies that balance financial sustainability, intergenerational equity and inclusivity. As demographic shifts accelerate, governments, employers and financial institutions must collaborate to create solutions that protect retirees while maintaining the economic stability of working-age and younger populations. To strengthen public retirement systems and enhance financial security for future generations, the following actions are critical: # 1. Implement sustainable financing mechanisms Adjusting contribution rates, linking retirement ages to life expectancy and diversifying investment strategies can help maintain system solvency without overburdening younger generations. # 2. Adopt gradual, well-communicated reforms Phased policy transitions, such as those seen in Canada and the Netherlands, can balance sustainability with fairness, preventing sudden disruptions to retiree benefits. Public confidence in pension systems can be strengthened through transparent governance, clear communication and behavioural nudges that encourage participation and long-term planning # 3. Expand coverage to informal and gig workers Innovative policies, such as portable retirement benefits and incentivized micropension schemes, can ensure financial security for workers outside traditional employment structures. # 4. Encourage or mandate auto-enrolment in retirement savings Countries with automatic enrolment in pension or retirement savings plans have seen significantly higher participation rates, helping individuals accumulate adequate savings for retirement. Expanding auto-enrolment policies and behavioural nudges can drive long-term financial security, particularly for low- and middle-income workers. # 5. Use technology for efficiency and accessibility Digital solutions can simplify enrolment, improve pension portability and provide individuals with real-time insights into their retirement planning. # From accumulation to decumulation The next frontier in retirement: transforming accumulated savings for the future into a predictable and reliable lifelong income stream. As the world has moved away from traditional defined benefit pensions towards more individual- led defined contribution plans, greater responsibility has shifted to each individual member to ensure that they can finance their desired level of income in retirement. Due to this transformation, a heightened focus has been placed on encouraging people to save and invest for their own futures. The financial services industry has developed savings and investment vehicles to meet this need. However, in many countries, particularly those where retirement income is largely dependent on defined contribution systems, one challenge remains – how do people convert their savings into a suitable source of income that can last them through their later years? How can they navigate the process of “decumulation”? # 2.1 | The case for action # Dignity in old age requires access to adequate and sustained retirement income. As more people globally are retiring from defined contribution plans, individuals in many countries are being pushed to make decisions about their retirement income that would traditionally have been left to institutions. This shift is particularly relevant in countries where defined contribution systems dominate retirement savings, such as the United States, Australia and the United Kingdom. (Notably, in countries where retirement income is automatically structured through collective risk-sharing models – such as the Dutch collective defined contribution system (see Section 1.3) or Singapore's lifelong income approach (see Section 2.3) – these challenges are mitigated, as individuals do not bear the responsibility of managing decumulation.) Should individuals consider purchasing an annuity or retain more flexibility by slowly - withdrawing money from their savings? What is an appropriate asset allocation in retirement? - How much should be left for future generations? - How best to combat the behavioural fears of seeing bank balances decline while also watching as the costs of healthcare and other services rise? This starts from an assumption that the individual has retirement savings outside of their public pension system. However, one in three Europeans are not saving for retirement;[24] one in five Americans aged over 50 have no retirement savings;[25] and in Australia, one in four men and one in three women lack a superannuation account.[26] The 2024 Global Retail Investor Survey found that $44\%$ of individuals worldwide fear outliving their savings, with younger generations more concerned than the generation closest to retirement age. Given retirement benefits have generally declined over time, younger cohorts anticipate lower replacement rates than their predecessors. # Individuals fear not having enough savings – but hesitate to spend their savings in retirement The decumulation dilemma FIGURE 3 NOTE: This statistic may include individuals who are also receiving retirement income from defined benefit plans. SOURCE: World Economic Forum. (2024). Global Retail Investor Survey. https://wef.ch/investoroutlook25; BlackRock. (2024). Spending and Investing in Retirement. https://www.blackrock.com/us/individual/insights/retirement/spending-and-investing-in-retirement Separate studies have looked at similar concerns around the world: - $60\%$ of people in Latin America do not believe that they have enough savings to last through retirement.[27] - $58\%$ of people in the European Union do not feel confident that they will have enough money to live comfortably throughout their retirement.[28] - The proportion of workers in Asia worrying about being poor and in need of money when they are retired ranges from $50\%$ of those surveyed in China to $95\%$ in Viet Nam.[29] - $70\%$ of Americans are worried about not having enough to fund their retirement.[30] However, despite these fears, retirees tend to draw down their savings conservatively if they have the option. In the United States, for example, retirees generally still have $80\%$ of their pre-retirement savings after almost two decades.[31] While this can be partially explained by bequest motives, the average person appears to be unsure how much they can safely spend in retirement, which may speak to their limited comfort with their own longevity literacy[32] (their understanding of how long they will live[33]) or concerns about future financial volatility, often exacerbated by worries about the long-term resilience of public retirement systems. # 2.2 | Understanding the challenges # Over the past few decades, the retirement landscape for individuals has changed significantly, from guaranteed income to risk and uncertainty. In place of a guaranteed level of retirement income with limited risk for workers, companies have ceded responsibility to the individual, enabling the potential for higher returns and flexibility, but with the downside challenges of uncertainty and risk. Many employers also used the transition to defined contribution plans to reduce contribution rates. This has long-term ramifications for individuals' retirement-preparedness. # Existing financial solutions, such as annuities, appear to struggle to adequately meet the need for a lifelong income. The "annuity puzzle" is the discrepancy between the predictions of economic models, which would suggest high annuitization rates, with the small proportion of retirees who hold an annuity. For example, in the United States, approximately $12\%$ of the population with sufficient financial assets to purchase an annuity (e.g. more than $100,000) chooses to buy one.[34] Recent findings by the Center for Retirement Research indicate that while approximately half of the population surveyed with assets sufficient to buy an annuity do want to buy an annuity for lifetime income security, they do not follow through on that desire.[35] Studies have tested whether low annuity take-up can be explained by lack of liquidity or inability to make bequests.[36] A further reason may be that people feel uncomfortable converting a large sum of money irrevocably into an annuity, as this may reduce their ability to withstand financial shocks. # Individual investors are turning to their own investment solutions to address decumulation challenges. With fewer retirees opting for annuities, many are turning to self-directed investment strategies to generate income in retirement. According to the 2024 Global Retail Investor Survey, retail investors are more likely to organize their decumulation strategy around dividend-paying stocks (39%). Others prefer working with financial advisers (31%) or adopting flexible withdrawal strategies (26%) based on market conditions or life expectancy; in contrast, only 17% plan to purchase an annuity, highlighting a broader preference for liquidity and control over more rigid, guaranteed income structures. As individuals take on greater responsibility for their retirement securities, the financial services industry has an opportunity to offer more accessible, flexible solutions that balance income stability with investment growth. What methods are you planning to use to turn your investments savings into usable income for retirement? <table><tr><td>Invest in dividend-paying stocks</td><td colspan="2">39%</td></tr><tr><td>Work with a personal financial adviser to determine suitable amount to withdraw per year</td><td colspan="2">31%</td></tr><tr><td>Withdraw a different amount each year based on market conditions and/or life expectancy</td><td colspan="2">26%</td></tr><tr><td>Withdraw consistent percentage from total investment accounts each year</td><td colspan="2">25%</td></tr><tr><td>Withdraw consistent amount each year</td><td colspan="2">23%</td></tr><tr><td>Purchase an annuity</td><td colspan="2">17%</td></tr><tr><td>Unsure/no approach yet in mind</td><td colspan="2">14%</td></tr><tr><td>I did not (or do not expect to) have investment savings to manage at time of retirement</td><td>3%</td><td></td></tr><tr><td>Other</td><td>1%</td><td></td></tr></table> NOTE: Investor respondents only. The 13 countries surveyed were: Australia, Brazil, China, France, Germany, India, Ireland, Japan, Singapore, South Africa, the UAE, the UK and the USA. SOURCE: World Economic Forum. (2024). Global Retail Investor Survey. https://wef.ch/investoroutlook25 # Current workers may already be adapting by anticipating working in some capacity through their retirement years. The traditional idea that people undergo distinct phases of education, work and retirement is evolving. While accumulation and decumulation are traditionally seen as two separate phases, future individuals will likely see themselves in later life blending accumulation and decumulation, as they may choose to take on additional work or receive income from other sources in traditional retirement. Current workers are more likely to anticipate working in some capacity through their retirement years and relying largely on their personal retirement savings and investments.[37] Future individuals will likely see themselves in later life blending accumulation and decumulation, as they may choose to take on additional work or receive income from other sources in traditional retirement. # 2.3 | Spotlights on innovation # Singapore's CPF LIFE – a model for retirement income Singapore's CPF LIFE (Central Provident Fund - Lifelong Income for the Elderly) $^{38}$ is a national lifelong annuity scheme introduced to address longevity risk amid rising life expectancies. This incorporates risk-pooling elements more commonly found in defined benefit systems into CPF's defined contribution scheme, providing retirees with a stable, lifelong income stream. Participants contribute to their CPF accounts during their working years, and these contributions are then used to fund their retirement income. Those with at least S $60,000 (approximately$ 44,250) are automatically enrolled in CPF LIFE, which ensures broad participation and results in the effective pooling of mortality risks with minimal adverse selection effects. The principal strengths include: - Retirees can choose from three plans depending on their desired retirement lifestyle. To address potential loss aversion that participants may feel about purchasing an annuity, CPF LIFE was also designed to have a refundable feature, where participants will receive at least their premium either in the form of payouts or a bequest. - Premiums and payouts are actuarially determined, undergoing periodic reviews to accurately reflect actual mortality and investment outcomes, enabling financial sustainability over the long term. - CPF LIFE has low administration costs; it is administered by the Singapore government and is designed to be nonprofit in nature. It does not incur distribution costs from agents' commissions. The high participation also results in greater economies of scale in administration, resulting in lower operational costs. By integrating behavioural principles, flexibility, financial sustainability and economies of scale, CPF LIFE serves as an innovative model for countries seeking to strengthen financial security in later life. # Brazil's RendA+ bonds for retirement security Brazil's RendA+ bonds, launched by the National Treasury in January 2023, are designed to provide a reliable, inflation-adjusted income stream to enhance retirement income security for individuals in defined contribution plans.[39] - RendA+ bonds feature a structured payment plan that disburses funds in 240 monthly instalments over 20 years, linked to the Extended National Consumer Price Index (IPCA). This ensures that payments keep pace with inflation, maintaining retirees' purchasing power. The design simplifies the investment process, making it accessible to individuals regardless of their financial literacy. - Payments linked to the IPCA safeguard retirees against inflation, providing stable income that adjusts to living costs. RendA+ operates as a market-driven instrument, with pricing based on the present value of future cash flows, ensuring transparency and trust. - An intuitive online calculator helps potential investors determine how much they need to save to achieve their desired retirement income, enabling them to make informed financial decisions. Ongoing education about the bond's benefits is crucial to overcoming barriers to adoption, as the initial uptake faced challenges, including confusion about the internal return rate compared to other government bonds. The introduction of RendA+ marks a significant advance in Brazil's retirement security efforts, by providing a straightforward means for individuals to convert savings into guaranteed income. Continued focus on investor education will be essential to maximize its impact and help more Brazilians secure their financial futures. Home equity release provides an alternative way for retirees who have a significant portion of their assets locked in home equity to supplement their retirement income without selling their home. Australia's Home Equity Access Scheme (HEAS) is a government-backed initiative that allows retirees to convert part of their home equity into a steady income stream at a low interest rate.[40] The programme is designed to provide financial flexibility for older Australians who may not have sufficient retirement savings but who own their homes. By unlocking home wealth without requiring a sale, the HEAS enables retirees to stay in their homes while supplementing their income for healthcare, living