Europe’s elder boom and baby bust: Leaders seek innovation to improve retirement security
September 20 2018 - 2:00AM
Business Wire
Europe’s rising longevity and falling birthrates are pressuring
its retirement systems like never before, as its elderly
populations grow relative to its working-age populations. By 2050,
nearly one in three Europeans will be over the age of 65, a trend
that promises to strain the finances of retirees and their
families, as well as the societies in which they live.
“Longer life is a gift, but it creates real and profound
implications for pension schemes and retirement plans that help
people live dignified lives as they grow older,” said Professor
David Blake of the Pensions Institute at Cass Business School in
the United Kingdom. “Making sure people’s retirement income is both
adequate and lasts a lifetime are two of the great challenges of
our time.”
To tackle such issues, Professor Blake created and hosts the
annual International Longevity Risk and Capital Markets Solutions
Conference, referred to this year as “Longevity 14.” This year’s
conference, the leading gathering on longevity issues for pension,
insurance, capital market, actuarial and academic professionals, as
well as policymakers, takes place on September 20-21 in Amsterdam.
Leading figures will discuss longevity risk as well as the
responses needed by pension funds and insurance companies to manage
that risk. Other subjects include intergenerational risk-sharing,
and the latest trends in mortality. One key topic: What explains
higher mortality rates in recent years, and why are longevity
improvements coming at a slower pace than in the recent past?
Amsterdam is an apt location for Longevity 14. The Netherlands
has the highest income replacement rate (retirement income as a
portion of pre-retirement earnings) among the world’s developed
countries (101 percent, OECD 2016), a level greater than Germany
(50.5 percent), Japan (40 percent), the United States (49.1
percent), and the U.K. (29 percent). But even the Dutch system is
considering major reforms because of the relentless wave of
demographic changes that have seen its citizens live longer and its
birthrate fall measurably. Many nations are considering shifting
more responsibility for retirement away from pension funds and
corporations and toward individuals, notably with defined
contribution plans.
Amy Kessler, senior vice president and head of Prudential
Financial, Inc.’s (PFI) longevity risk transfer business, and a key
speaker at the conference, will discuss how nations, including the
Netherlands, can support people to save, invest and secure lifetime
income, even in retirement systems where individuals are primarily
responsible for their own risk. Kessler will discuss how
understanding human behavior leads to program design that improves
retirement decisions and outcomes. In addition, she will
demonstrate that lifetime income solutions can be flexible enough
to address an individual retiree’s needs, and prudent enough for
insurers and regulators to be confident in their risk profile and
management.
“We can create retirement security. It takes time and
discipline, but we can do it. For every person we help to achieve
financial wellness and a secure retirement, we will dramatically
improve the last thirty years of their lives,” says Kessler. “There
are best practices we can leverage from work done all around the
world to improve the retirement security of real people.”
Since 2005, the International Longevity Risk and Capital Markets
Solutions Conferences, organized by the Pensions Institute at Cass
Business School, have been the major international events bringing
together leading industry and academic representatives, as well as
policymakers, to discuss longevity risk, as well as the market and
government responses necessary for managing that risk. Since 2011,
PFI has sponsored this conference series. The company’s research
and thought leadership from this event is widely read among
actuaries, insurers, academics and finance professionals.
About Prudential Financial, Inc.
Prudential Financial, Inc. (PFI), headquartered in the United
States (NYSE: PRU), is a financial services leader with more than
$1 trillion in assets under management as of June 30, 2018, and has
operations in the United States, Asia, Europe, and Latin America.
The company’s diverse and talented employees are committed to
helping individual and institutional customers grow and protect
their wealth through a variety of products and services, including
life insurance, annuities, retirement-related services, mutual
funds and investment management.
Prudential Financial, Inc. of the United States is not
affiliated with Prudential plc, a company headquartered in the
United Kingdom.
1008829-00001-00
PFI does not provide legal, regulatory, or accounting advice. An
institution and its advisors should seek legal, regulatory,
investment and/or accounting advice regarding the legal,
regulatory, investment and/or accounting implications of any of the
strategies described herein. This document does not constitute an
offer or an agreement, or a solicitation of an offer or an
agreement, to enter into any transaction (including for the
provision of any services).
Insurance and reinsurance products are issued by subsidiaries of
PFI and neither PFI nor any of its subsidiaries is authorized to
write longevity reinsurance within the European Economic Area.
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version on businesswire.com: https://www.businesswire.com/news/home/20180919005021/en/
MEDIA:Gregory Roth,
973-802-6585gregory.roth@prudential.com
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