There are five 'critical forces' reshaping retirement systems around the world, with countries facing challenges balancing fiscal sustainability and retirement adequacy, according to a report from State Street.

Its analysis identified these global forces as: demographic ageing, socioeconomic shifts (including the rise of gig working), technological disruption, rising longevity, and mounting fiscal pressures.

The report highlighted that while countries had vastly different system designs, every nation was facing similar challenges and most were converging towards portable defined contribution models and flexible decumulation.

It noted that longevity was no longer simply extending retirement, but was reshaping the boundary between work and retirement.

With careers becoming less linear and life expectancy rising, State Street said that systems must support flexible transitions, manage risk over longer timescales, and deliver dependable income rather than solely focusing on asset accumulation.

This reflected a wider shift from accumulation to delivering outcomes, with retirement success being defined by the system’s ability to covert savings into sustainable income, manage risks, and improve confidence through governance and execution.

The report highlighted that different retirement system models were converging towards shared priorities, and faced similar design questions around income delivery, risk sharing, coverage, and execution.

Anglo-American systems, such as the US, UK, and Ireland, remained fiscally resilient but faced adequacy gaps driven by reliance on funded pillars, with expanded coverage through auto-enrolment, nudges, and portability “pivotal” to success.

‘Bismarckian’ systems, in countries such as Germany, Italy, and Japan, were confronting ‘acute demographic strain’ in pay-as-you-go structures, with reform paths shifting more risk to individuals, increasing the importance of lifetime income design and decumulation defaults.

Meanwhile, advanced multi-pillar systems, such as in the Netherlands, Norway, Canada, and Australia, were showing greater diversification and resilience, but faced complex transitions and the need to extend coverage to self-employed workers.

Against this backdrop, State Street identified opportunities for providers to improve how they collectively create, fund, invest, administer and deliver pensions solutions.

To support decumulation, the firm argued providers should build ‘operate-to-outcome’ decumulation models that scale across cohorts, integrate modular risk pooling, and industrialise hybrid advice at retirement.

It also urged firms to consider building a modular, interoperable engagement layer to allow dashboards, data sources, and advice tools to connect seamlessly.

For risk transfers, firms were encouraged to build or partner to assemble a full endgame stack, including balance-sheet capacity and reinsurance, industrial-grade administration, member communications, and liability-aware asset origination.

To support the move into private markets, State Street said providers should consider how to provide defined contribution-appropriate private market access using the right wrappers.

It also argued it would be important to look at building co-investment and origination capacity through partnerships with leading funds, and to codify risk controls that align with regulation and deliver fairness to members.

“Expanding access to financial security in retirement has been one of the greatest financial innovations of the last century,” said State Street Investment Services president, Joerg Ambrosius, and State Street Investment Management president and CEO, Yie-Hsin Hung.

“Today, retirement saving and investing align the long-term interests of billions of people around the world and sit at the centre of global financial systems.

“Yet across regions the retirement landscape is being redefined. Structural and behavioural forces are reshaping how individuals and institutions plan, how systems operate, and how outcomes are ultimately achieved.

“We hope this research contributes to constructive dialogue across the retirement ecosystem and supports more informed decision-making in a period of meaningful change.”

This article originally appeared in our sister publication Pensions Age.

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