modern pensions: presentation to conference board pensions summit
TRANSCRIPT
Modern pensions Conference Board Pensions Summit presentation
Alex Mazer, Founding PartnerApril 13, 2016
Can pensions evolve?
2
Demand for retirement security is rising
3
Under-saving Health
Fiscal restraint Inequality
17% 50%TO
Post-pension financial products have disappointed
4
High fees
Marketing-driven
Members not first
Myth of choice
Financialization
5
Finance as a share of US GDP (%)
Source: Demos
The future of retirement: divergent paths
6
Employer pensionsModern pensions
Financial products
§ Member-focused§ Collective§ Low-cost§ Simple§ Accumulation + decumulation
§ Profit-driven§ Individualized§ High-cost§ Complex§ Accumulation-only
How pensions are usually defined
7
Regulatory category Plan design Institution
DB
DCvs
ERISAPBAPBSA
PRPP
Employer
Union
Public vs private sector
$ 1
Towards a functional definition
8
2
Singular focus
Members first
Contributions
Retirement security
Members
Others
Optimal sponsoring organizations
9
ScaleLongevity
Mandate
Principles underlying modern pensions
10
Single purpose: retirement security Simplicity
Lifetime approach Good governance
Minimize costs Fiduciary duty made real
Passive is usually betterTax and benefits
efficiency
Examples of modern pensions
11
Well-established
Starting up
The future? Unions
Governments
Associations
Pension funds
The good news: it’s not a moonshot
12
We’ve already got the parts
13
Sponsors Strong union, government, and association-sponsored plans.
Governance Much-admired governance models that work.
Investments New passive offerings. Active approaches that have added after-cost value.
Regulatory New plan types. More reformist governments.
From good to great
14
Decumulation Non-lump-sum products that are affordable and understandable
Alternatives Democratize access
Technology Simpler, cheaper administration
Regulation Nimble, integrated, pro-innovation
“Canadian model” Expand to private and third sectors