By: HUB’s EB Global Benefits Team

What Is It About?

Social pension systems worldwide, public pay-as-you-go pillars as well as funded defined-contribution arrangements are under clear pressure to deliver the level of retirement income that they were intended to provide.

Demographic aging, low real returns and past under-funding are forcing governments to respond with either higher mandatory contributions, changes that shift the cost or reduce the value of benefits. Other measures, such as increases in retirement ages, are very unpopular with minimal impact in resolving the overall problem of ensuring retirement income for future generations.

The answer, it seems, will be shifting the burden of retirement funding to employers and employees. Benefit teams are tasked to reassess cost, design and communication strategies to support their employees in securing financial stability during retirement. The following recent country actions illustrate the trend.

Defined Benefit Pay-as-you-go Systems

The UK raised the employer National Insurance Contribution rate for the second salary band while Belgium’s new federal government agreed in April to measures increasing employer pension-related levies on high-earning pension reserves in 2026.

Mexico - Recent reforms to the social security framework materially raise employer pension-related contributions over a multi-year transition, combined with increases to guaranteed minimum pensions.

Korea - Phased increases to National Pension contributions has been approved, raising the total contribution as part of reforms to shore up long-term fund solvency.

Panama, Rwanda and Bahrain are also increasing their employer social contributions, the first two on a phased approach until the end of the decade.

Of these countries, only Mexico and Korea’s cost increases were accompanied by an improvement in the benefit to employees.

Privately Managed Funded DC Regimes

Some countries have introduced retirement systems either as a replacement or in addition to social pensions that are based on individual savings accounts.

Chile was the pioneer when it introduced this model in 1981 with an employee contribution of 10% of salary. 40 years later, as employees begin to retire with a full career under this system, the government has come to the realization that the contribution is insufficient to build adequate retirement income. As a result, starting in 2027, employers will pay a contribution at a rate of 7% in addition to the 1.5% they already pay towards survivors and disability benefits.

Other countries are tackling the problem by introducing or increasing contributions to similar systems:

Ireland - New legislation introducing auto-enrolment pension schemes in 2026 will require employer matching and phased employee contributions (initially 1.5% each, rising toward 6% by the early 2030s), bringing a new, broadly applicable payroll cost for many employers

New Zealand -The government is raising default KiwiSaver contribution rates for employees and employers from 3% to 3.5% (1 April 2026) and to 4% (1 April 2028), increasing recurring employer payroll costs for defaulted members.

Impact on Companies

  • Increased statutory employer contributions directly raise payroll expense across multiple jurisdictions.
  • Changes to statutory benefits may trigger adjustments to supplementary employer retirement programs to ensure that the overall objective is still achieved.
  • Enhanced employer communication and support may be needed if shifts in statutory retirement programs may make employees anxious.

Suggested Employer Action

  • Reforecast payroll budgets to incorporate phased statutory contribution increases and social tax changes.
  • Review global retirement strategy to balance statutory mandates with supplemental plan design adequacy and competitiveness.
  • In countries where statutory benefits are also being affected (such as Mexico), assess opportunities to adjust supplementary retirement plans to ensure plan objectives are maintained.
  • Consider maximizing the tax advantages on supplementary retirement plans in lieu of other less efficient compensation or benefits elements in countries where applicable.
  • Enhance employee communication strategies on the subject of retirement and tools available to support retirement planning.

If you have any questions, please contact your HUB Advisor. View more updates in our Global Benefits Directory.