The 10th global Aegon Retirement Readiness Survey explores the impacts of the COVID-19 pandemic and says now is the time to forge a new social contract to future-proof retirement systems.
The COVID-19 pandemic has exposed weaknesses in retirement systems, while also revealing opportunities for improving them and intensifying the imperative for change. The New Social Contract: Future-Proofing Retirement explores the impacts of the pandemic and offers detailed recommendations for improving retirement security.
The report is based on findings from the 10th annual Aegon Retirement Readiness Survey of 15 countries spanning the Americas, Europe, Asia, and Australia that was conducted in early 2021. It is a collaboration between Aegon and nonprofits Transamerica Center for Retirement Studies® (TCRS) and Instituto de Longevidade MAG.
Retirement systems under strain
Long before the appearance of COVID-19, the annual survey has charted how retirement systems around the world are struggling with long-term sustainability. Social security and other government benefits are facing severe financial strain due to population aging, increasing longevity and declining birth rates, and persistently low interest rates.
Defined benefit pension plans, traditionally offered by employers, are being replaced by defined contribution plans funded by employees, which can have contributions from employers. Individuals are increasingly expected to self-fund a greater portion of their retirement income, yet many are ill-equipped to take on the risks and responsibility.
Almost four in 10 people globally (38 percent) are concerned about running out of money in retirement, the report finds. The pandemic and its extreme disruptions – ranging from the public health crisis to shocks to the global financial markets, communities, and workforces – have exacerbated this already precarious situation.
"Working together – policymakers, industry, employers, and individuals – we can design more inclusive, equitable systems that address the ever-changing retirement landscape, and in a way that provides greater flexibility and security for people to work and retire on their own terms."
Time to future-proof retirement systems
The 2021 report says that the pandemic also offers an unprecedented and urgent opportunity to forge a new social contract to address the challenges to secure retirement and create retirement systems fit for 21stcentury conditions.
"Working together – policymakers, industry, employers, and individuals – we can design more inclusive, equitable systems that address the ever-changing retirement landscape, and in a way that provides greater flexibility and security for people to work and retire on their own terms," said Catherine Collinson, CEO and president of Transamerica Institute® and TCRS, and executive director of Aegon Center for Longevity and Retirement.
Such future-proofed systems would provide greater flexibility and security for people to work and retire on their own terms, enabling the world to truly benefit from the potential gift of increased longevity.
About the report
The New Social Contract: Future-Proofing Retirement contains in-depth analysis, country comparisons, and detailed recommendations. It is based on findings from the 10th Annual Aegon Retirement Readiness Survey, a survey of 14,402 workers and 1,600 retired people across 15 countries: Australia, Brazil, Canada, China, France, Germany, Hungary, India, Japan, the Netherlands, Poland, Spain, Turkey, the U.K., and the U.S. The online survey was conducted in respondents’ native languages between January 28 and February 22, 2021.