World’s biggest economies are sitting on a pension time bomb which could spiral to more than $400 trillion
- World’s biggest economies are sitting on a pension time bomb which could spiral to more than $400 trillion by 2050, says WEF
- Increase in longevity and rapidly ageing populations around the world is the ‘financial equivalent to climate change’
Future generations are on course to become enveloped in the biggest pension crisis in history, according to the World Economic Forum (WEF), unless policymakers from the world’s leading economies take urgent action.
The Geneva-based organization predicted the challenges of an ageing population could result in the world’s largest economies being forced to tackle a pension time-bomb.
Analysis from WEF showed six countries with the biggest pensions, including the U.S., Canada, U.K., Netherlands, Japan and Australia, as well as the two most densely populated countries in the world – China and India – would face a retirement savings gap in excess of $400 trillion in 2050, up from around $70 trillion in 2015.
‘Financial equivalent of climate change’
“The anticipated increase in longevity and resulting ageing populations is the financial equivalent of climate change,” Michael Drexler, head of financial and infrastructure systems at WEF, said in the report published on Friday.
The body that organizes the annual gathering of the global elite in Davos said with babies being born today having a life expectancy of more than 100, the costs of providing financial security to people in retirement could skyrocket to unprecedented levels.
According to the WEF’s forward looking estimates, the retirement savings gap from all eight countries is set to inflate by 5 percent every year over the next four decades. This translates to an extra $28 billion of deficit every 24 hours.