Is it time to rethink what a pension means?

September 12, 2013 conduentblogs

I’m reading “100 drivers of change for the global accountancy profession” (yes I am!), a fascinating look at the near future for enterprise and society, from the Association of Accountants and Financial Professionals in Business. Given the uncertain environment the world’s going through, the report raises some questions you’d never have thought to ask before.

One of those questions arises from the trends in global population growth, improved health care, and the workforce age structure. Essentially, declining global fertility and an ageing, healthier population – along with the pressure of pension liabilities across all industries – has meant governments abandoning the default retirement age in many countries, people staying longer in senior positions, and existing retirees re-entering the workforce.

Governments struggle to meet the challenge of growing state pension requirements, while businesses need to account for increased salary and health care costs, re-thinking the pension implications of mergers and acquisitions, and responding to the demand to generate good jobs for and “unprecedented number of older workers.”

In this climate, what will a “pension” look like?

Never mind the decline in defined benefit pensions; never mind the move a while ago to phased retirement programs; what’s coming up in the next 10 years is a workforce that continues to work – out of desire, ability, and financial necessity – past the traditional retirement age. Are all the reforms now being discussed, planned, and implemented worldwide just a means of, as they say in the military, being ready to fight the previous war?

The issue will challenge the ability of firms to attract and keep older talented workers and meet funding obligations for current retirement programs, while finding new opportunities for younger generations.

What do you think a “pension” will look like in the next 10 years?

In the coming weeks we will be presenting a 5-part blog series on retirement readiness, called Flexing your financial muscles. Please check back on September 18th for the first in this five-part series by Buck principal Sandra Pappa.

 

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