Reinventing social welfare

The takeaways

In the face of rising social fiscal pressures, ageing populations, and pervasive health challenges, social welfare systems face an urgent need to adapt for the 21st century.
Focusing on prevention, personalisation, partnerships, and integrated digital support can lead to the creation of financially sustainable, human-centric systems.
Future social welfare should predict needs early, tailor services dynamically using AI, and foster ecosystem collaboration to address complex, interdependent vulnerabilities effectively.

Social welfare refers to the systems of support that prevent, protect, and remediate vulnerabilities within a population—commonly including disability, unemployment, childcare, housing, pensions, and poverty assistance. These systems enable social and economic wellbeing because they allow a jurisdiction’s population to participate meaningfully in society. But they’re facing a very steep financial cliff, as the mismatch grows between the cost of programmes and the capacity of economies to fund them.

Today’s systems have evolved over centuries, from charity care to the modern welfare state. But in many instances, they are complicated and fundamentally reactive. They identify problems and then attempt to respond to or mitigate them, rather than try to prevent them. Many of the efforts to improve the systems, while useful, have likewise been reactive: digitising, streamlining, and simplifying existing support through the optimisation of resources or delivery methods. And although far-reaching efforts like universal basic income (UBI) have been gaining consideration, evidence shows wellbeing gains but limited impact on employment. The budgetary cost of UBI is an insurmountable barrier to adoption.

All these efforts are necessary—but nowhere near sufficient. What’s needed is a comprehensive reinvention of a sector that accounts for 21.2% of GDP across the OECD.

Why? Powerful trends are reshaping the landscape of social welfare in a way that threatens to make it unsustainable. By 2050, the world’s population is projected to reach 9.8 billion, according to the United Nations. Thanks to longer lifespans and lower birth rates, by 2030, almost one in five people worldwide will be 60 or older. In many countries, the ratio of workers to dependents (children and elderly people) is dropping. This trend will intensify pressure on pension systems, healthcare, and eldercare services.

Societal shifts and emerging crises are increasing vulnerability across populations. Rates of depression, anxiety, and related disorders have surged globally—especially among younger people—worsened by events like Covid-19 and economic instability. Globally, 15% of working-age adults have a mental health disorder, contributing to over US$1 trillion in lost productivity annually. Chronic illnesses and disabilities are increasing as a result of ageing populations and conditions such as diabetes and long Covid. Around 1 billion people (15% of the global population) live with disabilities, and that number is expected to grow.

The combination of rising economic inactivity, technological disruption, and health-related benefit growth is making it more crucial to develop income replacement, employment activation, and long-term disability support programmes.

Governments around the world are entering a period of mounting fiscal pressure, in which rising demands on public spending—especially on health and defence—are colliding with constrained resources. In 2025, propelled by EU NATO members, EU defence spending was projected to reach a record €381 billion (US$449 billion)—up almost 10% from 2024. The cost of servicing the rising volume of public debt is increasing. Japan, known for its relatively low interest rates, has proposed spending the equivalent of $220 billion on debt payments for the next fiscal year. In the United States, interest payments on debt in the 2024 fiscal year were 13% of all expenditures, the highest share in 25 years. By 2035, projected welfare expenditures in countries such as Canada, Germany, and Australia are set to outpace current budgets by tens of billions of dollars.

Under these pressures, governments are grappling with the essential question: how can social welfare be made affordable without compromising outcome delivery and support for the vulnerable?

Here’s how. Instead of being bound by the challenges of the present, we must develop a vision of the future and work towards it. In healthcare, which faces many of the same challenges, the future of care is emerging, formed around what we call the four Ps: preventative, personalised, predictive, and delivered at new points of care. And if we are to build a future-ready social welfare system, we will have to forge a new ambition. For this, we also need an approach anchored by four Ps. Deliver support that is fundamentally preventative, anticipating interdependent needs before they become crises, and that is deeply personalised, with interventions tailored to individual circumstances. The vision will come to life in a resilient ecosystem of cross-sector partnerships that breaks down silos, and a seamless, integrated point of support where people can access holistic care.

In our world, value is constantly in motion. As a result, we are seeing a new definition of value in social welfare. Far beyond efficiency or money spent, creating value in the social welfare systems of the future means investing in what works, and using evidence and insight to prioritise interventions that deliver measurable, meaningful results for people and places. It means designing services around shared outcomes, reducing waste and duplication, and building sustainable models that avoid downstream costs.

Imagine a future in which professionals spend more time on fire prevention than firefighting, in which there’s more investment in capability and less in compliance, in which there’s a greater focus on outcomes than on activity, and in which success is measured by the lives changed and not just by the money spent.

Let’s get started.

Preventative

Intervening early is, in almost all cases, cheaper and more effective than waiting to provide a safety net once someone is suffering from an acute vulnerability. In the future, a truly preventative social welfare system will predict problems and reduce the need for intervention altogether. Interventions that address and promote participation—whether that takes the form of learning, work, or contributing to society—will pay particular dividends:

Globally, school feeding programmes, a relatively simple social safety net, are shown to reduce child malnutrition by up to 30% and increase school attendance by 15–25%, contributing to long-term human capital development.
The Youth Aware of Mental Health programme provides school-based booklets, posters, and five hours of instruction over three weeks. Operating across multiple countries, this programme saw a 50% reduction in suicide attempts and 49.6% lower risk of severe suicidal ideation among participants compared with control groups.
The YouthBuild Offender Project in the United States provides job training and education for young offenders, integrated into community housing projects. Participants showed significantly lower rates of reoffending compared with similar cohorts, and they improved their educational attainment, equivalent to a return of $7.20–21.60 in societal benefits for every dollar invested.

Practically speaking, a preventative system seeks to know what someone needs before they need it and builds a lifelong value chain of support systems that monitor, reinforce, and adapt to individual and community wellbeing. This vision moves beyond the partial preventative efforts common in many social welfare systems today (e.g. scattered pilots, short-term funding, and isolated programme components that address very few dimensions of prevention). Agencies can pre-approve interventions based on interconnected data between agencies.

One of the biggest barriers is measuring outcomes. These metrics are often delayed, diffused, and shaped by interactions across services and life conditions. Modern tools such as digital intake systems, interoperable records, cloud-based platforms, and predictive analytics make progress towards demonstrating concrete impact. Applications of data and AI will unlock new levels of insight by collecting robust outcome data, simulating scenarios using environmental indicators such as economic and demographic trends, and adapting strategies in real time. This allows governments to identify high-value interventions, scale what works, and discontinue programmes that don’t demonstrate impact. The shift towards continuous improvement ensures that resources are directed at the factors that truly drive change.

Imagine a future in which: A parent receives early alerts about developmental risks for their disabled child, along with coordinated access to speech therapy, childcare subsidies, and parenting support. And it’s delivered through an AI-enabled digital wallet where personalised portfolios of social support adapt in real time to life events, and predictive analytics optimise choices for long-term wellbeing.

Your next move: Develop cross-programme funding models that reward prevention and outcomes rather than siloed compliance.

Personalised

In social welfare, one size doesn’t fit all. People’s needs vary, and the more governments can target interventions to individuals and the specific causes of their vulnerabilities, the more successful they are likely to be in helping them avoid acute (costly) vulnerability or move more quickly out of it. In the future, advances in technology and AI will allow for dynamic, human-centric systems that empower individuals, promote participation, and improve outcomes through large-scale personalisation.

The OECD’s 2024 working paper documented how several countries are adopting integrated, personalised service models to support individuals with multiple and complex needs.

In the UK, integrated service pilots for care-experienced youth (e.g. youth who have grown up in foster care or residential care) led to a 30% increase in sustained employment and a 25% reduction in re-entry into care systems.
In Finland, personalised service pathways for individuals with disabilities resulted in a 40% increase in independent living outcomes and a 20% reduction in long-term institutional care costs.
In Canada, coordinated re-entry programmes for formerly incarcerated individuals reduced recidivism by up to 35% when services were tailored to housing, employment, and mental health needs.

Today’s social welfare systems are often fragmented and rigid, and eligibility is determined by fixed and broad criteria with disparate policy and legislative structures between programmes. Although administratively efficient, this approach falls short in meeting diverse or complex needs and changing circumstances in a way that maximises positive outcomes. Personalisation marks a transformative departure from the status quo—designing services with built-in adaptability so people can engage in ways that reflect their individual goals, preferences, and lived experiences. This method directly supports affordability through a more effective use of system resources.

Using a human-led, AI-enabled model, social welfare systems can recommend tailored pathways, adjust support levels dynamically, and ensure that interventions are timely and relevant while also providing intensities of support that are based on the individual’s degree of complexity.

Countries such as Finland and Denmark operate integrated data systems that link health, employment, and social data to enable proactive, personalised services, all while maintaining strong privacy protections. These systems are enabled by governance models that bring together agencies, communities, and individuals to co-design services that reflect real-world needs.

Imagine a future in which: An older adult’s housing, daily living, and income supports adjust automatically as their needs change—no need to reapply. Benefits are applied in real time through a familiar app, powered by AI and secure data infrastructure. Dignity is enhanced, while stigma and the risk of benefit expiration fall.

Your next move: Identify the policy and legislative barriers that prevent integrated and personalised service delivery today, and the reforms needed to enable a policy fabric and dynamic eligibility in the future.

Partnerships

We live in a world of ecosystems, in which different types of organisations with different capabilities collaborate to meet users’ needs. Social welfare systems of the future should link deeply within and across systems to create a cooperative delivery model that transcends barriers and leverages the unique strength and expertise of all players.

Take, for example, the Barnsley Metropolitan Borough Council in the UK, where a commission was led in collaboration across multiple layers of government and organisations to produce a genuinely integrated support ecosystem that allows economically inactive people to re-enter the job market and allows those with health conditions to remain in the workforce. By crafting services around prevention and personalisation, it also improved employer activation to shift attitudes, changed hiring and employment practices, and identified opportunities for wraparound supports for those with potentially complex needs.

Today, many social welfare models demonstrate stark gaps in how the capabilities of different organisations link together. And the persistence of transactional relationships between different parties is a limiting factor. In the future, governments will be best able to deliver the most efficient and impactful services by collaborating closely with partners. To unlock this potential, social welfare organisations must move beyond traditional partnerships towards full integration, all working in concert to deliver outcomes with greater precision, affordability, and impact.

Horizontal integration expands the scope of collaboration across domains: starting with core social welfare areas such as housing, employment, disability, and support for seniors, and extending outwards to health, education, justice, infrastructure, and beyond. Many of the root causes of vulnerability—such as trauma, poverty, or systemic exclusion—are influenced by factors outside the immediate domain where a problem surfaces. That means providers need to mobilise support across systems quickly and cohesively, regardless of how disparate they may seem. Doing so not only enables earlier intervention to improve individual outcomes but also allows the system to respond at more cost-effective points in a person’s journey—before issues escalate in complexity and expense.

Vertical integration reimagines the roles of players across the social welfare value chain—from direct service delivery to funders and market enablers, to regulators and policy developers, to system and platform architects. Vertical partnerships bring together nonprofits, private-sector actors, academia, and community organisations alongside federal, territorial, and local levels of government to address systemic problems that no single entity can solve alone. Each actor plays a distinct role, and the system must be designed to let them do what they do best—creating a system in which capabilities work together around specific outcomes, thus driving efficiency.

Imagine a future in which: A young person struggling with mental health is proactively connected by AI-powered universal access agents to local support and educational accommodations, designed in partnership with nonprofits and private providers. Caseworkers are empowered by data to provide problem-solving and empathy in person for the journey to recovery.

Your next move: Establish mutually beneficial agreements, interoperability frameworks, and common data standards that enable secure integration across vertical (federal, territorial, and municipal providers) and horizontal (health, housing, income, and justice) partnerships.

Point of support

Today, access to and delivery of social welfare is fragmented, characterised by multiple unstandardised delivery models, duplicative and bureaucratic applications, and difficulty in monitoring and ascertaining effectiveness. The future of social welfare envisions a seamless point of support experience, merging people-led and AI-assisted access points and delivery channels, in a hybrid environment between physical and digital spaces, ultimately driving a more efficient and outcomes-oriented system.

Evidence suggests this transition is already underway. The UN E-Government Survey 2024 found that countries investing in centralised digital portals saw a 22.6% increase in service accessibility and a 30% reduction in administrative burden for citizens. These portals allow individuals to securely access their service history, explore available supports, and receive personalised recommendations from a single account.

The point of support of the future becomes a dynamic interface that optimises intervention, drives efficiency, and ensures that no one falls through the cracks. Physical and digital entryways will combine to create a unified experience. Service hubs, system navigators, and support workers are complemented by secure, AI-enabled platforms and a single account that consolidates visibility and engagement across all supports within a jurisdiction. AI-driven tools guide users, track progress, recommend timely interventions, and—through advanced predictive analytics—identify emerging needs early to coordinate proactive outreach and service delivery. As needs become more complex or novel at the point of entry, caseworkers and delivery partners step in to build relationships, provide targeted supports, and ensure that individuals are appropriately engaged.

Imagine a future in which: Rural families receive the same timely, life-changing support as urban families—without travelling for many hours or waiting in long lines. They can apply once and securely access healthcare, childcare, and income support through local service hubs and mobile teams, using digital assets such as a secure online portal. With satellite connectivity and AI assisting staff—triaging requests, translating, and pre-filling forms—services stay coordinated across agencies while protecting privacy through verified identity, consent, and strong data security.

Your next move: Identify the skills and roles that will be critical for delivering a data-driven, AI-augmented social welfare system at relevant points of support—and start reskilling your workforce today.

The reinvention imperative

The case for reinventing social welfare is no longer theoretical—it is tangible and urgent. Realising this ambition will require a business model reinvention for social welfare, one that is led by humans and enabled by technology.

Governments must now focus on the creating the conditions that drive reinvention, starting from the design of the system and policy levers and working to create an outcomes-based blueprint for transformation. It will require operating on a whole‑of‑person, whole‑of‑ecosystem platform that unifies longitudinal data across programmes in a secure, consented database and developing integrated cross-system policy to enable dynamic, cross‑programme eligibility and benefits orchestration. This means rethinking capabilities of infrastructure, data, policy, partnerships, technology, workforce, and leadership—not as isolated reforms but as interconnected levers that together shift the system towards a model that responds effectively to threats and opportunities.

There are several no-regret primary actions governments can take that rely on technology and tools available now. These include:

Deploy an integrated case management system: Governments can unify social welfare services and drive personalisation and prevention through a shared digital backbone and single-access front end, enabling coordinated, partnered, and scalable support that evolves with citizens’ needs.

Improve data quality and build a data-driven environment: By treating data as a strategic asset for each of the four Ps and embedding access across workflows, governments can enable secure sharing, real-time insights, and innovation that drives outcomes for the sector—while protecting confidentiality.

Integrate policy and programmes across silos: Governments should design services around shared outcomes to improve personalisation using co-designed pathways, pooled funding, and partnership-based agreements in order to create a seamless, citizen-centred experience.

Unlock and incentivise private-sector collaboration: Strategic partnerships with the private sector—supported by outcome-based contracts and open infrastructure—can drive innovation and scale solutions within the public sector, augmenting capabilities to create a more holistic system.

Adopt emerging technologies to boost efficiency: AI and automation can streamline routine tasks and support predictive decision-making, freeing staff to focus on complex needs while improving service delivery through responsible, transparent deployment.

Introduce targeted preventative programmes for wellbeing: Low-cost, high-impact initiatives like Vitamin D supplementation and early childhood development programmes can reduce long-term system strain and deliver measurable ROI—moving the point of support upstream with preventative programmes.

Invest in a future-ready workforce: Governments must build a digitally fluent, adaptive workforce with new roles, continuous learning, and protected time for innovation to lead transformation from within, creating effective services aligned with all four Ps.

Adopt a visionary leadership mindset: Leaders should shift from managing programmes to shaping preventative, personalised, and partnered systems, using future-back thinking, scenario planning, and innovation labs to drive bold, long-term change.

Ensure robust programme fraud detection and controls: Governments should assess their programmes’ likelihood for fraud and value leakage through faulty process control mechanisms, seeking to improve integrity at the point of support.

A call to action

As governments and social welfare organisations look towards building future-oriented systems, it is valuable to learn from jurisdictions that are already advancing innovative approaches. Kela, the Social Insurance Institution of Finland; the Ministry of Social Development in New Zealand; and Employment and Social Development Canada have embarked on significant transformations to modernise service delivery and integrate programmes aligned with the characteristics (four Ps) and substantial shifts in capabilities that allow for a recalibration of policy levers aligned with broader outcomes.

The experiences of these organisations offer practical insights into what it takes to shift underlying business models and create more resilient, person-centred systems.

Focusing and learning is vital because the future of social welfare demands more than incremental change. It requires a bold reimagining of how systems are designed, delivered, and led—and of how value is created. The strategies outlined above offer a blueprint for navigating this complexity. But success will depend on leadership that embraces visionary thinking, cross-sector collaboration, and a willingness to challenge legacy structures.

This is the future we can create. The time to act is now.

The authors thank Yuka Aoki, Jan Backstrom, Kariana Brooking, Rena Brown, Archie Crichton-Stuart, Dean Dimkin, Hamish Elliot, Rob Fisher, Sandie Grimshaw, Marie Ingvaldsen, Marty Jovic, Ryan Lotan, Lavrans Løvlie, Faye Melly, Chisa Ose, Quinton Pienaar, Mizuki Shirai, Daniela Soldner-Rembold, Venkat Somasundaram, Junichi Sugihara, Haruna Takeshita, Hirotaka Tanii, Sarah Thomson, and Takashi Tokairin for their contributions to this article.