Analysis finds pension gaps widen as caregiving and ageism collide
A single year out of the workforce to provide care, combined with the gender pay gap, can cut a woman's retirement savings by an average of 24 percent.
According to "The Longevity Dividend: The Business Case for Linking Health and Wealth," a report from the World Economic Forum (WEF) and Marsh, a five-year career break early on reduces retirement savings by 29 percent regardless of gender.
The report draws on data from 21 countries and argues that physical and financial health move together, a connection the authors call the health-wealth nexus.
WEF and Marsh make the case that retirement savings gaps, productivity losses and avoidable healthcare costs all compound when institutions treat health and wealth as separate problems.
The caregiving penalty falls hardest on women, who make up the majority of caregivers.
The resulting gender retirement savings gap exceeds 50 percent in some countries, the analysis finds.
In India, women can see 42 percent lower retirement savings than men after one year out of work, rising to 56 percent after five.
WEF and Marsh estimate that more than 700m women aged 15 and above are kept out of labour markets by care responsibilities, against 40m men.
The earnings gap between men and women begins to widen around age 30, the average age of women's first births in OECD countries, and because savings accumulation depends on lifetime earnings, the gap locks in before workers reach their highest-earning years.
The report points to France and Germany, which have introduced care credits so family caregivers continue to earn state pension benefits while caring for relatives.
Such policies, the authors argue, recast caregiving breaks as retention opportunities rather than accommodations and help narrow retirement savings gaps.
Ageism compounds the problem at the other end of working life.
WEF and Marsh estimate OECD countries will lose nearly US$500bn in productivity by 2040 through under- and unemployment of adults aged 55 and over.
Older jobseekers spend an extra seven weeks in unemployment on average, with cumulative GDP losses projected at US$113bn for the US and US$106bn for France.
The report cites South Korea, which reached a 70 percent employment rate for adults aged 55 to 64, and Sweden's flexible pension system, which lets workers draw 25, 50, 75 or 100 percent of their pension while continuing to work.
The report frames longevity as a challenge that touches every age and economy, not only older nations.
By 2040, the number of people aged over 65 worldwide will rise by roughly 53 percent compared with 2025, while the traditional working-age population grows by only 13 percent.
The largest proportional increases in older populations will occur in countries typically described as young.
Three low-tech interventions could save healthcare systems more than US$5.8tn and unlock another US$645bn in productivity by 2040, the report finds.
Fall-proofing homes with grab bars, non-slip mats and better lighting could prevent 400m falls and save US$5.4tn against an outlay of US$393bn, while preventing falls would protect more than US$131bn in productivity among those affected and US$363bn among caregivers.
Increasing moderate exercise by two hours each week could prevent more than 8.5m new cases of type 2 diabetes, boosting productivity by more than US$120bn.
Expanding hearing aid use could prevent 2.4m dementia cases and save more than US$320bn, with the Netherlands, the UK, Canada, Singapore and the US each recouping more than 100 percent of their initial outlays through dementia-related savings.
The report recommends introducing caregiver credits, redesigning employee benefits to link financial and health support, creating return-to-work pathways for caregivers and combating workplace ageism.
WEF and Marsh caution that their figures are directional estimates meant to illustrate an approach, and they say the interventions work only if institutions stop addressing health and wealth in isolation.
