State Street Global Advisors, the asset management arm of State
Street Corporation (NYSE: STT), announced today that it has defined
a ‘formula for retirement happiness.’
In a new research paper, entitled ‘The Global Retirement Reality
Report: The Happiness Formula’, State Street Global Advisors
compared objective rankings of various retirement systems with
qualitative results from a survey of over 9,500 respondents in
eight countries1.
It found that the retirement structures with the highest
objective rankings did not necessarily correspond to the happiest
respondents.
For example, the Netherlands consistently ranks as one of the
strongest retirement systems in the world; it has the highest
Melbourne Mercer Global Pension Index ranking and maintains a very
high level of coverage, participation and savings rates. However,
the Netherlands has the lowest level of satisfaction in retirement
of all the countries surveyed.2 Meanwhile, in the US, those savers
in a DC plan are very confident and optimistic about their
prospects and indeed are generally happy in retirement, despite
comparatively low levels of saving and a low index ranking.
The report found that the key factors driving retirement
happiness were a combination of trust in a country’s retirement
system stability, a strong feeling of ownership regarding their own
outcomes and being well prepared in terms of accumulated retirement
assets.
Here are the key findings from the report:
- Trust: Stability and credibility of
a country’s retirement system engenders trust whereas recent
change or the expectation of change at the policy level, such as
alteration of retirement age, erodes trust. For example Italy has
recently undergone painful reforms to the pension system and
Germany and the Netherlands are on the cusp of reforms; this erodes
trust. However, if these reforms are successfully implemented and
individuals embrace their roles in the new system, these countries
could look more like Sweden (one of the happiest retirement
countries) with an established and well-understood, sustainable
system.
- Ownership: Individuals who embrace
ownership of, and feel that they have control over, their
retirement outcomes are happier. If people accept that they are
responsible for their retirement and understand the choices that
they can make, they feel more secure. Respondents in the US and
Australia, where there is a long tradition of individual retirement
responsibility through Defined Contribution savings, were the
happiest in our survey. Despite having lower assets, the UK and
Ireland have potential to be moving towards these models
- Preparedness: Having sufficient
retirement assets is critical in determining retirement readiness
and satisfaction. The challenge faced by many is determining
how much is “enough” and understanding whether savings will be
sufficient. In addition, the study highlighted that few people
understand how to convert a relatively large lump sum into a
dependable income for life, making the definition of sufficiency
elusive. Italian and Irish respondents, in particular, were
concerned that they were not prepared for retirement.
As a result of the findings, State Street recommends the
following key takeaways based on the happiness formula:
- Trust: Keep retirement plans as
simple and stable as possible: Avoid making changes, or when
changes have to be made, communicate them well in advance and
provide clear and comprehensible illustrations of the probable
impact
- Ownership: Build workers’ confidence
in owning their retirement destiny and reward good behaviors they
take: Illustrating the impact of actions that participants can
take, such as changing their savings rate, retirement age or
investment allocation can build confidence and increase ownership.
Providing easy access to trustworthy sources of guidance – whether
online, in person, or by phone – is also important.
- Preparedness: Enable workers to
assess the sufficiency of their retirement assets to help put
retirement into perspective: Provide participants with clear
income projections so that they can understand whether they are on
track for a secure retirement and educate them on how much they
would need to save to achieve certain goals
“As is the case with happiness more generally, there is not one
driver, but several elements that combine to enable a happy and
secure retirement,” Nigel Aston, global head of strategy and
proposition at State Street Global Advisors. “By observing
retirement realities through the eyes of the individual saver, we
are working to truly understand people’s experiences with state and
institutional structures globally. By doing so, we can offer
solutions that are as multidimensional as the needs of the people,
plans, and policies involved. Happiness is important and evolving
as our lives evolve.”
“From these findings, we hope to have arrived at a blueprint for
a successful retirement structure that combines effective practices
with rewarding retirement experiences, gathered from around the
world,” said David Ireland, head of Global Defined Contribution at
State Street Global Advisors. “With this study, we are looking to
identify the factors across a number of retirement systems that
drive retirement happiness, which can become best practices that
are applied as retirement systems shift to have an increased
reliance on the Defined Contribution model.”
The full report can be found here
About State Street Global Advisors
For four decades, State Street Global Advisors has served the
world’s governments, institutions and financial advisors. With a
rigorous, risk-aware approach built on research, analysis and
market-tested experience, we build from a breadth of active and
index strategies to create cost-effective solutions. As stewards,
we help portfolio companies see that what is fair for people and
sustainable for the planet can deliver long-term performance. And,
as pioneers in index, ETF, and ESG investing, we are always
inventing new ways to invest. As a result, we have become the
world’s third largest asset manager with nearly US $2.72 trillion*
under our care.
*This figure is presented as of June 30, 2018 and includes
approximately $33 billion of assets with respect to SPDR products
for which State Street Global Advisors Funds Distributors, LLC
(SSGA FD) acts solely as the marketing agent. SSGA FD and State
Street Global Advisors are affiliated.
Investing involves risk including the risk of loss of principal.
Equity securities may fluctuate in value in response to the
activities of individual companies and general market and economic
conditions. This material should not be considered a solicitation
to apply for interests in the Funds and investors should obtain
independent financial and other professional advice before making
investment decisions. There is no representation or warranty as to
the currency or accuracy of, nor liability for, decisions based on
such information.
Australia: State Street Global Advisors, Australia, Limited (ABN
42 003 914 225) (AFSL Number 238276) ("SSGA"). Registered office:
Level 17, 420 George Street, Sydney, NSW 2000, Australia •
Telephone: +612 9240‐7600 • Facsimile: +612 9240‐7611 Web:
www.ssga.com.au
Belgium: State Street Global Advisors Belgium, Chaussée de La
Hulpe 120, 1000 Brussels, Belgium. Telephone: 32 2 663 2036,
Facsimile: 32 2 672 2077. SSGA Belgium is a branch office of State
Street Global Advisors Limited. State Street Global Advisors
Limited is authorised and regulated by the Financial Conduct
Authority in the United Kingdom.Ireland: State Street Global
Advisors GmbH, Brienner Strasse 59, D‐80333 Munich. Authorised and
regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht
(“BaFin”). Registered with the Register of Commerce Munich HRB
121381. Telephone +49 (0)89‐55878‐400. Facsimile +49
(0)89‐55878‐440. www.ssga.com
Germany: State Street Global Advisors Ireland Limited is
regulated by the Central Bank of Ireland. Incorporated and
registered in Ireland at Two Park Place, Upper Hatch Street, Dublin
2. Registered Number: 145221. Member of the Irish Association of
Investment Managers. T: +353 (0)1 776 3000. F: +353 (0)1 776
3300.
Italy: State Street Global Advisors Limited, Milan Branch (Sede
Secondaria di Milano) is a branch of State Street Global Advisors
Limited, a company registered in the UK, authorised and regulated
by the Financial Conduct Authority (FCA ), with a capital of GBP
71'650'000.00, and whose registered office is at 20 Churchill
Place, London E14 5HJ. State Street Global Advisors Limited, Milan
Branch (Sede Secondaria di Milano), is registered in Italy with
company number 06353340968 ‐ R.E.A. 1887090 and VAT number
06353340968 and whose office is at Via dei Bossi, 4 ‐ 20121 Milano,
Italy • Telephone: 39 02 32066 100 • Facsimile: 39 02 32066
155.
Netherlands: State Street Global Advisors Netherlands, Apollo
Building, 7th floor Herikerbergweg 29 1101 CN Amsterdam,
Netherlands. Telephone: 31 20 7181701. SSGA Netherlands is a branch
office of State Street Global Advisors Limited. State Street Global
Advisors Limited is authorised and regulated by the Financial
Conduct Authority in the United Kingdom
United States: State Street Global Advisors, One Iron Street
Boston, Massachusetts 02210
United Kingdom: State Street Global Advisors Limited. Authorised
and regulated by the Financial Conduct Authority. Registered in
England. Registered No. 2509928. VAT No. 5776591 81. Registered
office: 20 Churchill Place, Canary Wharf, London, E14 5HJ.
Telephone: 020 3395 6000. Facsimile: 020 3395 6350.
© 2018 State Street Corporation - All Rights Reserved
Tracking number: 2267947.1.1.GBL.PR
Expiration date: 06/30/2019
1 Germany, Italy, Netherlands, Sweden, Ireland, UK, US and
Australia2 The Global Retirement Reality Report: The Happiness
Formula (pp12-13)
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version on businesswire.com: https://www.businesswire.com/news/home/20181011005794/en/
State Street CorporationAndrew Hopkins,
617-664-2422Ahopkins2@statestreet.com
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