ERSTE Stiftung Studies

Aging Populations, Pension Funds, and Financial Markets. Regional Perspectives and Global Challenges for Central, Eastern, and Southern Europe

The ageing of population is a phenomenon in the whole world but especially advanced in highly developed northern countries. The countries of Central, Eastern, and Southern Europe (CESE) have some of the oldest populations in the world. Combined with other challenges population ageing will place additional pressure on their pension systems. This study, a cooperation between ERSTE Stiftung and the World Bank, discusses six key themes that emerged from an international discussion on demographic ageing and financial markets against the backdrop of the countries of CESE.


Population ageing is expected to affect the performance of financial markets in developed and emerging countries at a time when ever more countries are relying on funded provisions for old age income support. For the former transition economies in Central, Eastern, and Southern Europe this creates special challenges because the ageing of their populations is well advanced while the development of their financial markets is still in progress. This study investigates the challenges faced by these countries in the context of international experience from the OECD and Latin America under six headings: (i) “Mulit-Pillar Pension Reform in CESE Countries – Were the Financial Systems Prepared for the Challenges?” (ii) “How can the Financial Markets Be Developed to Better Support Funded Systems?” (iii) “Population Ageing and Payout of Benefits: Issues and Options,” (iv) “Can the Financial Markets Generate Sustained Returns on a Large Scale?” (v) “Does Investing in Emerging Markets Help?” and (vi) “Will Population Aging Impacts Rates the Return?” The overarching conclusion of this study is that these challenges can be addressed but addressing them will require determined policy actions to complete financial market development and to promote financial literacy through education.