Should Retirement Savings Be Mandatory? (Forum)
In the United States, and in many other countries, only a fraction of households have saved enough to look forward to a comfortable retirement. For those without a sizable nest egg, the so-called “golden years” are a grim prospect. Not surprisingly, governments around the globe are grappling with how their citizens will afford retirement.
In a report released this week, David Knox, a senior partner at Mercer, put it this way: “Pension systems around the world, whether they be social security systems or private sector arrangements, are now under more pressure than ever before. Rising life expectancies, increased government debt in many countries, uncertain economic conditions and a global shift to defined contribution (DC) plans mean that we are moving to a new environment.”
What to do to shore up retirement security, especially in the United States, which ranked 11th out of 20 countries in this year’s Melbourne Mercer Global Pension Index?
Earlier this year, Larry Fink, chief executive of BlackRock (BLK), called for “a comprehensive solution to retirement savings that includes some form of mandatory retirement savings, similar to Australia’s successful superannuation system or the new pension requirements in the UK.”
Could this be the way forward for the United States? Other countries?
There are many issues to consider. In places where there is a component of mandatory retirement savings, how well has it worked? Is “nudging” effective? What about fees, standardizing risk disclosure, improving financial advice, and strengthening investment defaults?
To help empower investors and financial advisers to make better decisions — a key aim of the Future of Finance project at CFA Institute — we’ve assembled a global panel of experts to discuss the issue of mandatory savings and retirement security. The participants are well-versed on the pros and cons of the pensions systems in Australia, China, the Netherlands and the United States.
The discussion will run from 9–11 October 2013. If you’d like to share your perspective or pose a question for our panelists, scroll to the bottom of this post and leave us a comment. Or send a tweet to: @laurenfosternyc. We’ll do our best to incorporate your thoughts into the discussion. For more information on this topic, check out our recommended reading list.
Richard Brandweiner, CFA (@ims_ppt)
Richard Brandweiner, CFA, is director of investment services at First State Super, one of Australia’s largest superannuation funds with more than $36 billion in funds under management. Brandweiner is president of the CFA Society of Sydney. He holds a bachelor of economics degree from University of New South Wales.
Teresa Ghilarducci (@tghilarducci)
Teresa Ghilarducci is a labor economist and nationally-recognized expert in retirement security and is the Irene and Bernard L. Schwartz Chair of Economic Policy Analysis and director of the Schwartz Center for Economic Policy Analysis in the Department of Economics at The New School’s New School for Social Research. Her most recent book — When I’m Sixty Four: The Plot Against Pensions and the Plan to Save Them — investigates the loss of pensions for older Americans and proposes a comprehensive system of reform. Her previous books include Labor’s Capital: The Economics and Politics of Private Pensions (winner of an Association of American Publishers award in 1992) and Portable Pension Plans for Casual Labor Markets. Ghilarducci is on the executive board member of the Economic Policy Institute, a member of the Retirement Security Advisory Board for the Government Accountability Office, and a court-appointed trustees for the retiree health care trusts for UAW retirees of GM, Ford, and Chrysler, and USW retirees of Goodyear Tire.
Jacco Heemskerk, CFA (@JaccoHeemskerk)
Jacco Heemskerk is managing director of RBS Nederlands Pension Fund in the Netherlands. He is also the chairman of the Works Council for RBS in the Netherlands, a supervisory board member of the regional development company omU (NV Ontwikkelingsmaatschappij Utrecht), and vice president of the CFA Society Netherlands. Jacco graduated from the Erasmus University in Rotterdam, holds a master’s degree in economics, and has been a CFA charterholder since 2006.
Stuart Leckie (@LeckieStuart)
Stuart Leckie, OBE, is the chairman of Stirling Finance, a Hong Kong–based pensions and investments advisor. Leckie is the coauthor of Pension Funds in China, a book that provides a comprehensive and critical look at China’s pension reform journey from 1949 to 2004, and also authored Investment Funds in China. He advised the Hong Kong Government on the establishment of the Mandatory Provident Fund, had served on various committees in Hong Kong’s Securities and Futures Commission and was a director of Exchange Fund Investment Limited which launched the very successful Tracker Fund. He currently advises on investments and pensions in Hong Kong and mainland China; he has advised the Chinese Government on pensions reform. He is also an independent non-executive director at Treasury China Trust.
Meir Statman (@meirstatman)
Meir Statman is the Glenn Klimek Professor of Finance at the Leavey School of Business, Santa Clara University. His research focuses on behavioral finance. He attempts to understand how investors and managers make financial decisions and how these decisions are reflected in financial markets. Meir’s book, What Investors Really Want, has recently been published by McGraw-Hill. Meir’s research has been published in the Journal of Finance, the Journal of Financial Economics, the Review of Financial Studies, the Journal of Financial and Quantitative Analysis, the Financial Analysts Journal, and many other journals. Meir received his Ph.D. from Columbia University and his B.A. and M.B.A. from the Hebrew University of Jerusalem.
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