The World Economic Forum (WEF) has presented a report on the longevity economy. According to the authors, including several APG staff members, a fundamental shift in perspective is required.
The longevity economy is transforming global economies and reshaping social structures, according to the authors of the report Future-Proofing the Longevity Economy: Innovations and Key Trends. "After all, we are living longer, which leads to rising pension and healthcare costs. This demands action, and the report offers a roadmap for it," says Alwin Oerlemans, Head of Product Management at APG AM. Together with Nick van de Sande-Korpershoek and Ruben Laros from Team Policy & Public Affairs, he has played a important role in drafting the report on behalf of APG. "As the global population ages, societies must evolve to ensure financial security at all life stages."
The report highlights several important areas. It emphasizes the need for societies to develop resilient public pension systems, facilitate the transition from asset accumulation to (lifelong) pension distributions, recognize the role of employers in financial well-being, and focus on the economy of caregiving and long-term care.
Pension system reform in the Netherlands
"There is significant room for improvement in these areas. Take, for example, the development of a resilient pension system. The Netherlands is leading the way with its pension reform. Because of this, other countries that have not yet made such progress are closely observing us", Laros assures.
According to Oerlemans, the major advantage of the pension system reform in the Netherlands is that while pensions become more individualized, the benefits of collectivity and joint investments remain intact. "Social partners still take responsibility for company-wide or sector-wide agreements, and mandatory participation ensures universal inclusion. Moreover, the Dutch pension contract reform is transitioning from a hybrid DB-like (defined benefit) structure to a hybrid DC-like (defined contribution) structure. With a different mix of collective and individual elements and retained risk-sharing, this approach aligns well with the longevity economy. Modernizing the pension system, as the Netherlands is doing, ensures sustainable security for aging populations."
Traditional models
The WEF report makes it clear that traditional models for work, retirement, and financial planning are no longer adequate. Resilient public pension systems, sustainable lifetime income strategies, and flexible financial pathways must be integrated to support individuals across extended life phases. Policies, financial products, and employer strategies must evolve to enhance career flexibility, financial resilience, and security at every life stage.
“The report does not just stay at a high level; it also provides recommendations. For example, it suggests improving pension solutions and ensuring financial security in later life. Policymakers should encourage innovative and cost-effective income solutions, employers should ideally facilitate pension planning for employees approaching retirement, and financial institutions should develop and market innovative pension products”, says Van de Sande-Korpershoek.
Flexible work structures
Another key recommendation in the report concerns flexible work structures and career transitions. "As we work longer, lifelong learning becomes increasingly important. It enhances workforce adaptability and ensures people remain active until and even beyond retirement”, says Oerlemans.
According to the report, policymakers should encourage this by implementing flexible work arrangements and protecting workers' rights during career transitions. Employers, in turn, can introduce policies that enable flexible working, such as pension accrual during parental leave, sabbaticals, and job-sharing. "Individuals also have a role to play. They must utilize available resources to navigate career changes. Financial institutions, on the other hand, have an opportunity to offer products that cater to this desired flexibility”, Laros explains.
Fundamental shifts
The report highlights the need for a fundamental shift in perspective on the longevity economy. "Compared to the energy transition and the AI revolution, this topic is often overlooked. In our view, it does not receive the attention it deserves”, says Laros.
Furthermore, it requires a different outlook, Oerlemans notes. "The report provides concrete and relevant suggestions for policymakers, financial institutions, employers, and individuals. It also makes it clear that cross-sector actions are urgently needed to seize the opportunities of the longevity economy. These actions must address the economic and social consequences of demographic changes."
Want to know more? Read the full report here.