Europe’s Pension Problem Is a Capital Allocation Problem

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Ageing populations, strained pension systems, and long-term funding pressures were recurring themes in recent global policy discussions. These aren’t abstract future risks. They’re already influencing how capital is allocated across markets today. Pensions, often treated as a social policy issue, are increasingly a capital allocation problem. And as demographics shift, markets tend to adjust quietly, but decisively, in response.

The Demographic Reality

Europe is ageing faster than most developed economies. Birth rates have fallen, life expectancy has risen, and the ratio of workers to retirees continues to narrow. Fewer contributors are being asked to support a growing number of beneficiaries, placing sustained pressure on state pension systems.