Change and the Graying of the World Population
Aging populations will put enormous pressure on public pension systems as the number of workers per pensioner falls. These trends are projected to hit hardest in Europe, where 35 percent of citizens will be 60 years old or older in 2050, compared with 20 percent in 1999. The ratio of persons of working age to persons aged 60 and over will drop from five currently to two in 2050. Asia will experience a decline from 11 to four, while the ratio in the United States will drop from five to three.
To meet these burgeoning demographic pressures, many developed markets will need to generate higher returns on pension fund assets, particularly as pension liabilities grow. The same is true in emerging markets, which are just beginning to develop private savings systems. European countries are moving toward privatizing pension plans and offering retirement savings vehicles resembling the U.S. 401(k) plan.