Allianz recently unveiled the first edition of its Global Pension Report, which analyses pension systems from countries around the world using Allianz’s very own pension indicator – the Allianz Pension Indicator (API).

The indicator follows a simple logic: it begins with an analysis of demographic and fiscal preconditions, after which it looks at national pension systems based on two crucial dimensions: sustainability and suitability. It is therefore based on three pillars and takes into account a total of thirty different parameters, which receive ratings on a scale of one to seven, with one being the best possible rating and seven being the worst. By summing up all of the subtotals, the API assigns a rating of one to seven to each of the seventy countries analysed, thus providing a detailed and comprehensive overview of many national pension systems.

“In recent years, demographic and pension policies have been overshadowed by other policies, primarily by climate change, and currently the fight against the coronavirus pandemic,” said Allianz’s chief economist Ludovic Subran.

“But you can’t ignore demographic data, given that changes in the demographic picture will soon become a burning issue. Mitigating the impending pension crisis and preserving generational justice and equality are key to building inclusive and resilient societies,” he added.

Dramatic changes in the demographic picture are most visible in the increase in the share of the economically inactive elderly population. By the time 2050 rolls around, the share of such individuals will grow by a staggering 77 percent to 25 percent, faster than it has in the last seventy years, from 1950 to now.

Over the next three decades, many emerging economies will see more that share more than double in size. The best example is China, where the aforementioned share will jump from the current 17 percent up to 44 percent. In the case of industrialised countries, the absolute level of this share is a major cause for concern; for example, in Western Europe alone it stands at 51 percent.

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