Solving for retirement: All paths lead to more private savings

Solving for Retirement: All Paths Lead to More Private Savings

According to Michael Davis, head of global retirement strategy at T, the most significant shift in the superannuation and pension landscape is the rising support ratio worldwide, rather than the move toward internal asset management, passive investing, or private markets.

The Rising Support Ratio Challenge

The rising support ratio, also known as the old-age dependency ratio, poses the greatest challenge and opportunity for superannuation, pension, and sovereign wealth funds, especially in developed nations.

In Japan, the support ratio currently stands at 51, meaning every 100 working adults support 51 retirees; in the 1950s, this ratio was just 8.
In the United States, the ratio has increased steadily to 33, a trend that has been called "The Silver Tsunami."

Demographic Pressures on Pension Systems

Factors such as increased life expectancy, declining birth rates, and stricter migration policies that limit labor inflow intensify the strain on pay-as-you-go (PAYG) pension systems.

“PAYG systems have provided a tremendous amount of security for individuals around the world for many, many years but they are under immense financial pressure,” Davis says.

The combination of these demographic shifts is creating unprecedented financial stress on traditional pension models, driving the need for greater private savings solutions.

Author's Summary

The growing old-age dependency ratio and demographic shifts globally are forcing pension systems to adapt, emphasizing increased reliance on private savings for retirement security.

Top1000funds.com — 2025-11-04