The disruption of traditional employment and pension sustainability

The global pension system, traditionally reliant on contributions from formal-sector workers, faces existential threats due to the shift of young generations toward digital entrepreneurship, gig work, and remote careers. These generation’s preference for flexible, non-traditional employment structures which is fueled by globalization and digital connectivity, reduces their participation in contributory pension schemes, jeopardizing retirement fund sustainability worldwide. Is this a fact or just another alarm that is not required?

Globally, regions face unique challenges: North America’s growing gig economy is likely to leave a significant percentage of workers without retirement savings; Europe contends with aging populations and labour shortages; Asia’s “lying flat” movement rejects corporate careers; and Africa’s informal sector dominance, sidelines pension participation. Nigeria mirrors these trends, with 92% of its 115.5 million working-age population in informal employment and only 10.3 million actively contributing to the Contributory Pension Scheme (CPS). Despite efforts like the Micro-Pension Plan (MPP) targeting informal workers, participation remains low (143,565 participants), exacerbated by younger generation’s preference for digital nomadism, cryptocurrency, and decentralized finance.

With this shift in interest on what work entails, these generation not having to pick-up formal employment of service are not actively contributing to the different pension schemes in practice across countries. This poses a threat to the growth of pension funds and the assurance that current pool of active workers will have access to retirement funds when eventually they phase into retirement. Again is this a fact or a myth?

If it is a fact or likeness of it, then it raises a crucial question: who will sustain the pension systems that millions of current workers rely on for their retirement?