Schroders’ research reveals post-retirement solutions must blend investment and insurance components
Today Schroders announces the launch of its global research report into post-retirement solutions. The research, compiled across the largest global markets offering Defined Contribution (DC) plans, was conducted to provide insight into what may be the right saving solution for retirees across the world for their post-retirement financial needs. With no country’s DC savings ratio above 5 times its average final salary, those invested in cash can expect to run out of money after just 8 years, less than half the median life expectancy in the developed world.
With a continuing global trend in the move from Defined Benefit to Defined Contribution, the current generation of savers, as well as generations to come, will now face the longevity and investment risks previously shouldered by plan sponsors. Although this shift allows individuals more flexibility and choice in post-retirement, it also increases the number of risk considerations. Retirees may be at risk of outliving their savings and underestimating their consumption levels. Further threats include higher inflation and lower investment returns than expected.
With governments and employers no longer providing investment frameworks, people will look to asset managers and insurers to develop solutions that fit their needs, reduce investment risks and maximise their financial longevity in post-retirement.
Lesley-Ann Morgan, Head of Global Strategic Solutions at Schroders, said:
‘At Schroders we believe that a successful post-retirement solution requires stable real investment returns and reliable protection against longevity later in life. It must also retain flexibility to adapt to changing requirements, as well as keeping the solution simple to implement. Ideally the postretirement solution will be independent from political interference or at least have long-term cross-party support.’
‘The findings of the research show that with lengthening life expectancies, we believe that a successful strategy will be a blend of investment and insurance components. In early retirement, investment growth continues to be necessary to maintain the purchasing power of savings with longevity protection required later in life to provide income certainty. Individuals will need clear options and illustrations at retirement of different combinations and their impact. Successful delivery is likely to require enhanced technology.’
‘At Schroders, we are kick starting the post-retirement conversation with the aim of guiding investors towards a healthier long-term solution enabling them to achieve their retirement objectives.‘
To read the full findings of the research, including analysis of the pension landscape in the UK, Australia, Chile, Netherlands, Singapore, South Africa, Sweden and the US, please click on the link:
For further information, please contact:
Lucy Cotter Tel: +44 (0)20 7658 3365/ email@example.com
Sarah Deutscher Tel: +44 (0)20 7658 6139/ firstname.lastname@example.org
Notes to Editors
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Schroders is a global asset management company with £319.5 billion (EUR441.6 billion/$474.3 billion) under management as at 31 March 2015. Our clients are major financial institutions including pension funds, banks and insurance companies, local and public authorities, governments, charities, high net worth individuals and retail investors.
With one of the largest networks of offices of any dedicated asset management company, we operate from 37 offices in 27 countries across Europe, the Americas, Asia and the Middle East. Schroders has developed under stable ownership for over 200 years and long-term thinking governs our approach to investing, building client relationships and growing our business.
Further information about Schroders can be found at www.schroders.com.
Issued by Schroder Investment Management Ltd, which is authorised and regulated by the Financial Conduct Authority. For regular updates by e-mail please register online at www.schroders.com for our alerting service.
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