Aging populations, demographic transformation and responsibility for long-term savings moving from the state to the employer to the employee are three of the most critical megatrends facing today’s global economy. Supporting the financial well-being of millions is further elevating the importance of managing pension and retirement assets to maximize investment and benefit outcomes.
Our global research reveals that the required magnitude of necessary financial well-being pension assets may exceed USD $500 trillion. This emphasizes the need for public and private companies, governments, policymakers and other providers to rethink current strategies, challenge established beliefs and work together to build a better retirement world.
Many governments, post-financial crisis, recognize that financial well-being policy promises are the country’s single largest long-term financial liability. This is leading to widespread benefit reform pressure and increased public scrutiny on costs, fees, returns and other associated aspects such as executive remuneration.
More stakeholders ask if fiduciaries and policymakers are performing their legal duties as asset owners. To counter fee pressure and maximize benefits from economies of scale, more pension funds are embarking on insourcing of asset management and assets. Government as well as public and private sector providers and stakeholders are increasingly asking questions, which we have used as a baseline for this investment-focused research. Across the globe, there is a clear distinction between pension, retirement and social security organizations. For simplicity, we broadly refer to this group in our findings under the “pension” umbrella.
This report sheds light on current industry trends and stimulate debate among stakeholders. EY firmly believes that a solvent, sustainable, transparent pension and retirement system is a key pillar to building a better working (and retirement) world.