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Pension systems face longer payouts as birth rates fall, report says
CNBC reports that longer lives and sub-replacement fertility are stretching pension funds, according to the 2026 Marsh CFA Institute Global Pension Index.
- New headline Was: “‘Ticking time bomb’: The world's pension funds face an ageing crisis”
- Our desk filed its story
Pension systems worldwide are under strain as people live longer and birth rates fall, raising questions about how long current payout structures can last, CNBC reported, citing the 2026 Marsh CFA Institute Global Pension Index1.
Defined-benefit plans face larger liabilities as retirees live longer, while defined-contribution savers risk outliving their balances, the report said1. Pay-as-you-go systems, which use current workers' contributions to pay current retirees, are especially exposed as the worker-to-retiree ratio shrinks1.
Of 55 pension systems in the index, 43 have fertility rates below the 2.1 replacement level and 23 have rates below 1.5, CNBC said1. Life expectancy at age 65 in more developed regions has risen 50.9% since 1950 to about 20 additional years1.
Sebastien Betermier, executive director at the International Centre for Pension Management, told CNBC the problem has grown over time, with some members retired into their late 100s1. "Think about the cost that it imposes actually on the next generation … it is a ticking time bomb," he said1.
The index report said funding of future pensions and aged care becomes more critical as the worker-to-retiree ratio declines, and that very few systems as they currently operate are secure1.
In the United States, the Old-Age and Survivors Insurance Trust Fund is projected to exhaust its reserves in the fourth quarter of 2032, according to the latest trustees' report cited by CNBC1.
Fully funded schemes are not immune: as members retire, some funds may pay out more than they take in, forcing a rethink of investment strategy and liquidity, the index warned1. About a third of Australian superannuation funds recorded negative natural cash flows from assets over a three-year period, CNBC said, citing a 2025 Australian Prudential Regulation Authority report1.
Industry watchers said pressure for higher returns has pushed some funds toward private equity, infrastructure and private credit1. Jean-Pierre Aubry of the Center for Retirement Research at Boston College said funds were shifting toward riskier investments, with U.S. state and local plans holding only about 20% of assets in bonds1.
David Elias, chief executive of Australian fund Hostplus, said ageing was only one factor in investment decisions and that governments could respond through immigration and technology1. What individual systems will change, and on what timeline, was not settled in the reporting1.
