Pension industry stakeholders have been urged to collaborate further if the industry is to remain viable in the face of reform and changing consumer demands, says Ernst and Young.
In a recent report – The $500 trillion prize: A customer-centric vision for the global pension and retirement market – Ernst and Young (EY) indicated that public and private sector stakeholders need to develop long-term pension strategies as reforms and consumer choices increase.
EY global pension and retirement leader Josef Pilger said addressing this transformation demands policy and industry change.
“On their own, reforms give consumers choices without adequately considering their experiences and perceptions or the information and tools they need to make informed decisions.
“We need to work together to change our attitudes, policies and delivery systems by putting the focus on the customer instead of the products, to help them make the best possible decisions to build their financial wellbeing,” said Mr Pilger.
The report – which is based on insights from government, policymakers, pension industry executives and corporate employers in 21 countries – found that only two-thirds of governments, policymakers and regulators have a clearly defined long-term strategy.
“In particular, governments, policymakers and regulators recognise the significant need to improve their long-term pension and retirement strategy, as governments may be an underwriter of last resort for pension and retirement gaps,” the report stated.
Maree Pallisco, EY superannuation leader for Oceania, said governments will be under pressure as underwriters of last resort for pension gaps.
Speaking on the Australian system, Ms Pallisco said: "In the coming decades, the increasing costs of health care, aged care and pensions will put significant strain on the national balance sheet and, like many countries, we’re looking at the challenge of how we are going to fund and support an aging population – particularly in delivery.”
Ms Pallisco argued that government and regulators need to develop a strong framework for retirement funding.
“The private sector also has an important role to play in setting vision and strategy.
“Providers need to understand the experience and outcomes desired by consumers, and infrastructure needed to help address these distribution challenges to ensure the sustainability of our superannuation system,” she said.