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are facing combined pressures. and decreasing birth rates mean that fewer workers pay taxes and social security contributions to support retirees. Additionally, because reaching old age is becoming more common, state healthcare and care systems are far more expensive. Higher rents and higher mortgage rates can add strain on household savings. 

The impact these converging trends will have on future retirement incomes remains uncertain. But it is clear that people will become more reliant on private retirement savings (whether employer or employee-financed).��

Our research on pension adequacy, employee sentiment, and employer action reveals some of the challenges shaping retirement risks. 

Financial education would help companies and their employees understand what they may need to save to retire in line with their goals. In this year’s , 86% of employees said that they plan to work beyond their normal retirement age.��

However, the reality is likely to look different in many cases. More people are spending a . This can force people to retire early if they are unable to find alternative employment that meets their needs. Businesses could be missing out on opportunities to plug talent and skills gaps by increasing the .

As a result, families will increasingly have to support two generations in retirement. This could become a real problem where multi-generational families rely on the financial support of the working generations.��

Better information and tools to model retirement outcomes will be essential for effective retirement planning. Although flexible working is now more common, we need to improve flexible retirement options. Currently, only proactively offer phased retirement options. ��

Greater flexibility will help employees transition gradually into retirement. This means people have more time to contribute to their retirement pot, and delays drawing on their savings until later in life.

Our grades retirement income systems around the world. The Index ranks the Netherlands, Iceland, Denmark, and Israel at the highest level. Based on the data, each of these countries were found to have robust and sustainable pension systems offering good benefits and a high level of integrity.

The highest scoring pension systems provide essentially universal access to a high-quality retirement plan. Some countries may have good pension systems, but workers lack occupational pension plans, so they score lower in our Index.

_{Source: Mercer’s . The above examples are illustrative and non-exhaustive. ��}

_{Debates surrounding pension adequacy have been increasing, with from September 2025. Lower paid employees and those who have taken career breaks (who are often women)¹ see the biggest shortfalls in retirement income. Much more needs to be done to address these imbalances.}

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^{1. Prarthana Prakash, “Hybrid work is about more than just flexibility for women returning from career breaks—it’s��a ‘great enabler’ for their professional lives,”��Fortune, available��at www.fortune.com/2023/11/05/hybrid-work-flexibility-return-to-work-women-career-returners-breaks/}

As a starting point, businesses can consider:��

Authors and Contributors

Mercer

• Graham Pearce, Global DB Segment Leader