Covid-19 only ‘short-term’ delay in population shift towards aging population

Sub Levels

The second edition of the company’s Global Pensions Report, Reforms that go against the demographic clockused the Allianz Pension Index (API) to analyze 75 pension schemes worldwide to assess their adequacy and sustainability.

The API provides analysis of demographic change and financial conditions, the sustainability of pension systems and preparedness for the impact of demographic change, and the adequacy of pension systems in providing an adequate standard of living after retirement. divided into two sub-indicators. A total of 40 parameters were considered on a scale of 1 to 7, one with the highest score.

The Covid pandemic has wiped out a decade of gains in life expectancy, resulting in the need for pension reform to address an increasingly aging population, according to the report. got it. In addition, Allianz found that increased financial support to households led to earlier withdrawals from pension savings and an overall lower level of retirement savings.

API’s first sub-index shows that Covid-19 impact has eradicated life expectancy growth over the decade, while global life expectancy poised to rise from 73.4 years in 2023 to 77.2 years by 2050 are arranged. There are about 1.6 billion people aged 65 and over, and it is projected to reach about 200 million in Europe.

Longer life expectancy trend continues after Covid-19 temporary setback

Source: United Nations Population Division (2022)

A second sub-index pointed out when assessing the sustainability of pension schemes should consider the burden of premium payers.

Allianz said higher contribution rates could lead to higher labor costs, “lower international competitiveness” and competition for the “informal labor market” that seeks to avoid paying contributions altogether. I discovered that

A study that analyzed more than half of pension schemes where the contribution rate as a percentage of wages exceeded 20% found that there was “little room for further increases” in contribution rates to deal with declining contributions. reported. Demographics and financial situation.

A third sub-index analyzed benefit levels, pension scheme coverage, access to financial services, and the integration of older workers into the job market. Analyzes show that pension coverage is 100% or so in most developed countries, and access to financial services is similarly high in many European countries, while pension plans in many emerging markets are low. coverage and benefit levels remained low, with employee salaries being the main source of income for the elderly.

Many private sector employees and retirees in emerging markets are still ineligible for pensions

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Source: International Labor Organization/Allianz

With an unweighted average score of 3.6 across all 75 pension plans, Allianz ranks ‘slightly improved’ rather than ‘mostly satisfied’ based on findings from the first Global Pensions Report published in 2020. Britain was ranked An overall rating of 75 pension schemes scored an overall score of 3.1, scoring 3.5 in the first sub-index, 3.7 in the second sub-index and 2.4 in the third sub-index.

Mikaela Grimm, Senior Economist and Head of Insurance Assets and Trends Research, Arne Holzhausen, said: “Our analysis shows that more sustainable and adequate pension schemes are within reach. It shows – if you have a strong capital funding pillar in place.

“In many countries, however, pension reform must begin with labor market reform, either by increasing the proportion of people in the formal labor market in emerging economies or by pushing older workers into the labor market in developed economies. Without promoting consolidation, the intended pension reform will have little effect.”

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