Global pension ageing crisis puts pressure on retirement systems

The global pension ageing crisis is placing pressure on retirement systems as people spend longer in retirement and the relative pool of workers shrinks. The 2026 Marsh CFA Institute Global Pension Index, published on October 20, evaluates 55 systems and focuses on the consequences of ageing for pension sustainability.

According to CNBC's account of the index, 43 of the 55 systems have fertility rates below the replacement level of 2.1 children per woman, including 23 below 1.5. Life expectancy at age 65 in more-developed regions has risen 50.9% since 1950 to roughly 20 further years, the report said, extending the period over which retirement income may be needed.

Why does an ageing population put pension systems under pressure?

The mechanism depends on the design of the pension system. In pay-as-you-go arrangements, contributions from current workers largely finance payments to current retirees. A falling worker-to-retiree ratio can therefore weaken the contribution base at the same time as benefit costs rise.

The IMF has similarly identified longer lives and lower birth rates as the two principal drivers of population ageing. It said in 2020 that countries further through this demographic transition face a smaller labour force and fewer people paying into pension systems.

Funded systems invest contributions from workers and employers to meet future obligations. They face a different, though related, challenge: as schemes mature, benefit payments can exceed incoming contributions. The index cautioned, as reported by CNBC, that this can increase a fund's reliance on accumulated assets and investment returns while raising its liquidity requirements.

That outcome is not universal. But the Australian Prudential Regulation Authority found that about one-third of Australian superannuation funds had negative natural cash flow over the three years covered by its 2025 report, meaning benefit payments were greater than contributions, CNBC reported.

How do the risks differ between pension plans?

Defined-benefit plans promise an income determined by a formula. When members live longer, the cost of providing those promised payments rises. In defined-contribution plans, retirement income depends on savings accumulated and investment performance, so participants may face the risk of exhausting their assets during a longer retirement.

Some observers told CNBC that the search for returns could lead funds towards more complex or higher-risk holdings, including private equity, infrastructure and private credit. David Elias, chief executive of Australian fund Hostplus, said demographics were one consideration among many and stressed diversification across asset classes, regions and industries, as well as returns that compensate for risk.

What does the 2026 pension index show?

The index measures systems through more than 50 indicators across adequacy, sustainability and integrity, covering about 66% of the global population, according to CFA Institute and Marsh. Its results underline variation between countries rather than a uniform outcome for pension funds.

The Netherlands, Denmark, Iceland, Singapore, Israel and Australia received A grades. Marsh ranked Denmark, Iceland and the Netherlands as the three highest systems on its sustainability measure.

The report recommends broader pension coverage, stronger funding and governance, and more flexible retirement arrangements. The IMF has also described higher statutory retirement ages and tighter eligibility rules as measures used by countries seeking to balance adequate retirement income with sustainable systems.

This story draws on original reporting from CNBC.