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How EY can help
Insights from a recent focused and qualitative study commissioned by IFC and conducted by EY teams indicate far deeper and mutually beneficial socio-economic aspects between private retirement systems, capital markets and socio-economic development through the spillover effects. The interdependencies between funded private retirement systems, capital markets and the wider socio-economic ecosystem can have transformational impact on development and sustainability across many aspects and stakeholders, particularly in developing countries.
About the retirement system spillover research
Public and private pension and retirement research often focuses only on policies and expected outcomes for beneficiaries and the system as a whole. This research, by contrast, focused retrospectively on key observable drivers for success of private pillar 2 (occupational or employment-based) and pillar 3 (voluntary, supplemental and individually funded) retirement systems and their ecosystems in selected, mostly developing countries. As a baseline, EY teams created a systematic balanced and hypothesis-driven “leading practice framework” that covers the ecosystem, capital market and other relevant qualitative, quantitative and stakeholder behavioral context.
Defining “success” of the funded private retirement ecosystem
Modern funded private retirement systems mostly prioritize adequacy, with less focus on sustainability and integrity as key tenets of system success. A significant focus is on “retirement and directly relevant policy parameters,” and expected rational behavior. Little research focuses on the journey of delivering the policies in practice over decades, the role of mostly private sector providers, the wider ecosystem impacted by accumulation of large long-term risk capital pools and their often-vital secondary impact.
In simple terms, we focused on the spillover effects and secondary interdependencies between funded private retirement system, capital market and the relevant wider ecosystem and stakeholders that impact outcomes and sustainability with their decisions and parameters.