Financial Security - Mend the Gap

Our Thinking / Wealth / World Economic Forum

Financial Security: Mend the Gap
Calendar07 September 2017

Global retirement systems play a critical role in society and impact virtually every major stakeholder group, as well as the broader economy and financial system. Historically, public and private institutions had managed and pooled the risks of individuals and guaranteed certain outcomes to individual participants, but that system has slowly been supplanted by one where each individual is personally responsible for their retirement and long-term financial well-being.

Mending the Global Pension Gap

Corporate pensions, public pensions and individual savings are all underfunded. The key to financial security requires coordination among public, private and individual stakeholders.

As a global consulting leader in advancing health, wealth and careers of individuals, Mercer has been tracking the trends behind the global pensions shortfall. Our financial security consultants have been advising our clients on how they can best prepare their people for an uncertain future and improve their overall financial stability.

In this breakfast session, we highlighted key aspects of Mercer’s latest research around financial security in retirement, and explained what these evolving trends mean for the future of retirement. We discussed what stakeholders can do to drive change from the individual level to the corporate level to the government level. Areas of focus included:

  • Public Pensions, as tracked by the Melbourne Mercer Global Pension Index (MMGPI), the world’s most comprehensive comparison of global pension systems, measuring 27 systems against more than 40 indicators to gauge their adequacy, sustainability and integrity.
  • Private Pensions, as tracked by Mercer’s monthly funded status report and pension buyout index.
  • Individual Savings was addressed by new Mercer Inside Employees’ Minds™ Financial Wellness research, which was unveiled at the World Economic Forum. The research helps to understand what motivates employees to make decisions to help themselves become financially stable and achieve financial security, and to validate the link between financial concerns and impact on employee health and stress.

Private Pensions Perspective

"Pension systems around the world, whether they are social security systems or private sector arrangements, are now under more pressure than ever before. Declining birth rates and increasing longevity have put financial security in retirement at risk".

Public Pensions Perspective

"Falling rates, low returns and longer lifespans are eroding funded status for Defined Benefit plans. The Mercer Pension Buyout Index tracks the relationship between the pension obligation held for its retirees in its financial statements and the cost of transferring such obligation to a third party (that is, an insurer)."

Watch the replay of our broadcast here and follow us for more updates on MercerInsights.

 

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