NEW DELHI: Size of retirement savings gap in India is expected to touch USD 85 trillion by 2050 from the current shortfall of USD 3 trillion largely due to longer lifespans and reduced levels of savings, says a WEF report.

The savings gap resembles the amount of money required in each country (including contributions from governments, individuals and employers) to provide each person with a retirement income equal to 70 per cent of their pre-retirement income.

According to a World Economic Forum study the retirement funding gap in the world's six largest pension saving systems - the US, UK, Japan, Netherlands, Canada and Australia - are expected to reach a USD 224 trillion gap by 2050.

Adding in China and India, which have the world's largest populations, the combined savings gap for the eight countries reaches a total of USD 400 trillion by 2050, a sum five times the size of the current global economy.

The report noted that the savings gap will grow fastest in China and India at growth rates of 7 per cent and 10 per cent respectively and three key drivers of this growth include rapidly ageing populations, high percentage of informal sector workers and growing middle class.

"The anticipated increase in longevity and resulting ageing populations is the financial equivalent of climate change," said Michael Drexler, Head of Financial and Infrastructure Systems at the World Economic Forum.

To alleviate the looming crisis, governments must address the gaps in access to the pensions system and ageing populations as they are the key sources of the widening pension gap, WEF said.

"Individuals need to increase their personal savings and financial literacy, while the private sector and governments should provide programmes to support them," said Jacques Goulet, President, Health & Wealth at Mercer.

The report was prepared by the World Economic Forum in collaboration with Mercer, a global consulting leader across health, wealth and careers.