Retirement Security
by Jennifer Warren on Jun 01, 2009
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Sample. Forces impacting retirement security, economics, demographics, etc.
Sample. Forces impacting retirement security, economics, demographics, etc.
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• After 9/11, markets shaken, confidence reeled but recovery expected; This is different.
•Pre-retirees with large equity exposures hit hardest. Plans mothballed.
• Opportunity to address fundamental weakness in our RS infrastructure, in gen'l w/ lg institutions and education for upcoming and current retirees.
• Predictions abound, but volatility is expected
• Certain regions less bad, but tax revenue implications with states having to cut spending and/or raise taxes. Hardest hit countries--US, Jap, Ger, UK
• Concerns about stimulus' effect on future economic growth and debt implications
• DC holders have to ride out down mkt or shift to more conservative investments w/i portfolio.
• DB: Is my plan going to be able to deliver promised benefits?
• Overconfidence in fin’l engineering, heightened sense of global market’s competition spurred the race to the bottom (thought to the top ala returns)
• Confusion about signals bc media focus on stk mkt.
• Need knowledge about risk management applied to ind. HH. Lacked knowledge of personal liability or responsibility in plan(s)
We’re aging--a meta-trend. We will add more retired for workers to support.
Around the globe, many populations of developed countries are aging, some developing too, like China.
• Shows that as a pension fund, you need to look at individual states’ characteristics, trends, and other influences--i.e., micro-level trends.
• World more globalized than 2 decades ago even; fin’l mkts integrated.
• Re: Asset p: Theory says.. and empirical evidence
• Down trend of i rates: as dissaving occurs, then i rate rises.
• S-t developments like bubbles and mania, etc. impact the theoretical projections. (Hyman Minsky)
• GDP declines apply to OECD co’s (one-third less than growth in period 1970-2000)
• I think the burden will be noticeable w/o changes. Workforce declines 10-15%.
• Changes must come.
• In 50’s it was much higher owing to a lack of disincentives to work.
• Will next 50 look like last 50 year; it cannot.
• Not clear w/Obama admin.
• Unable to tax way out of 80-120 trillion shortfall
• Incentives matter as in effective rtmt ages and HC: fund avail/ben owed.
• Poland, ave age 58 + rich benefits at over 10% GDP; generational conflicts already
• Jap: aging pop, shrinking econ, but people still working later; up to 2050, pop decreases 20% w/ dependency ratio 1:1.
• Netherlands changed plans to ave. wage from final pay after 2001 to shore up pensions.
• Past relied on employer
• Start with you as partner; you can guide them.
to control one’s retirement destiny--offer the chance to reduce vulnerability and control future