The role of pension providers in an ageing world

But it’s not just an increased number of days that make our lives longer; it’s also that we make more new starts and detours. This new landscape of longer lives with more twists and turns has profound implications for how pensions are provided and the kind of support people need during the different stages of their personal journey.

In OECD countries, people who are 65 today can expect to live another 20 years. Worldwide, the number of people aged 65 or more is expected to double from 806 million in 2023 to 1.6 billion in 2050.

The startling pace of scientific developments means that what seemed to be established ceilings for life expectancy, with developed-country averages settling in the 80s, are no longer solid. Some projections suggest that Generation Z — the population cohort born roughly between 1997 and 2012 — could have an average life expectancy of more than 100 years.

The prospect of an extended lifespan has given rise to the concept of the Fourth Age, a no longer exceptional stage of life extending beyond the traditional, once brief spell of retirement. As our understanding of human longevity evolves, the three-stage model of life — youth, working years and retirement — has become increasingly outdated.

The sense of having more time means that people are not just transitioning from one clear-cut phase to another but are engaging in a mosaic of experiences, ramping on and off traditional career ladders and timeframes. Taking time out to retrain or return to university, to accompany children, to care for ageing parents, or to realise some idiosyncratic personal ambition – whatever the many reasons, the human lifespan feels more malleable.

Implications of extended lifespans

The implications of living longer extend beyond the individual; they ripple through families, employers, governments and entire industries.

Families must redefine their dynamics as older relatives need care while younger generations seek to balance work and family responsibilities. Employers face the challenge of maintaining workforce productivity while adapting to an age-diverse workforce. Governments are tasked with addressing the financial implications of an ageing population on pension systems and healthcare provision.

And private pension plans need to adapt to stop-start careers that don’t necessarily end abruptly with a single retirement moment as individuals stretch their working life into what used to be considered old age.

‘Healthspan’ and ‘workspan’

While lengthening lifespans are an empirical fact, an essential aspect to consider is the distinction between ‘lifespan’, ‘healthspan’ and ‘workspan’. It is counter-productive to extend life if the additional years are marked by deteriorating health and lack of meaningful activity.

People today must invest in their health, skills and productivity throughout their lives. Understanding the economic and personal implications of an increased lifespan can be described as ‘longevity literacy’ – planning is critical, along with maintaining flexibility through ongoing education and retraining, sometimes entailing career breaks that need to be funded.

Employers play a critical role in this transformation. They should cultivate a workplace friendly to older employees that provides flexibility in working hours and conditions. Recognition that older employees bring experience and perspective can foster intergenerational collaboration, to the benefit of the organisation.

Innovating in pension plans

As the landscape of work and life changes, private pension plans need innovation, including diversifying offerings and embracing technology. Employers and employee benefits providers must broaden their scope and transition from merely offering pension products to providing services that support employees' overall wellbeing, such as healthy living programmes, financial literacy initiatives and education platforms.

Danish company Grandhood is an example of the kind of innovation that can flourish. Founded in 2017, Grandhood has disrupted the traditional pension model, which tended to serve employees of small companies poorly. Around 400,000 Danes currently lack pension savings, many of them working for smaller businesses that are unable to provide adequate retirement solutions.

Grandhood’s digital pension solution tailors offerings to individuals’ needs, emphasising flexibility and accessibility. Clients can start with minimal contributions and increase them over time, facilitating an inclusive approach in which pension enrolment becomes a natural element of early career development.

The company recognises that the perception of pensions can appear outdated, and it has integrated modern digital solutions that cater specifically to younger employees, making engagement with pension planning relevant and appealing. The approach includes providing podcasts featuring experts on health, positivity and productivity, bridging the gap between pension planning and essential life skills.

"We focus on helping our customers stay healthy through initiatives like our health podcast. In the near future, we also plan to organise health lectures for our customers. This is only possible for us because our capacity has increased as a result of digitizing traditional pension tasks,” says Morten Dyhrberg Wewer, Co-CEO of Grandhood.
 

Multi-dimensional approaches

Meanwhile, Halixia, a UK-based start-up, is spearheading the ‘whole person’ approach to address the needs of an ageing population. Developed from a concept created as part of the World Economic Forum’s Longevity Economy group, the core tenet of Halixia's mission is that multiple factors determine people’s ability to live a better, longer life. Preparing for later life requires more than pension contributions. This approach offers benefits at a micro and macro level, serving the needs of individuals, communities, industry and the economy.

Halixia’s platform delivers small, achievable actions that help individuals make incremental and lasting change in four key life areas: health and wealth, which are standard concerns and priorities of an ageing population; community & purpose — which addresses the need for connection with others throughout life; and lifelong learning, which helps people reskill, upskill and maintain meaningful working lives. Lifelong learning is particularly focused on helping workers stay engaged and continue earning an income for longer, meaning pensions go further and benefiting employers who face a growing labour pool challenge of fewer working-age people.

“We are seeing more and more forward-thinking pension providers embrace the concept of longevity, and organisations like the OECD and the World Economic Forum are pushing the topic higher on our collective agenda,” explains Mark Glover, Co-founder and Director of Halixia.

“Retirement, including when and how people collect their pensions, is changing. Demographic forecasts show there is a huge opportunity for companies that leverage the longevity economy, to win more customers, to deepen their share of wallet, and to protect growth for the long term.”

Challenges ahead for pension providers

As the pension industry adapts to these evolving demands, it is crucial for traditional providers to rethink their offerings. Companies that stick to conventional models risk becoming irrelevant to future generations, who will expect pensions tailored to their lifestyle and fluid career trajectory.

Pension providers must adapt to a world in which taking breaks for education, providing care or following personal pursuits becomes the norm rather than the exception. Swiss Life, along with other partners in its network, is closely focused on the need for flexible solutions that cater to the unique requirements of an ageing population and enable people to live in financial security.

“I believe that pension providers cannot keep innovation in-house. We need inspiration from the outside and we need to do this through partnerships with non-traditional and innovative companies,” says Swiss Life Network CEO Michael Hansen.

“Halixia and Grandhood are great examples of different thinking within our industry, and there are others to be found in areas like insurtech, healthtech and trend-based expert companies such as TrendsActive, with whom we at Swiss Life Network are developing our approach towards Generation Z.”