We are switching gears. The way we live, work, consume, and save
are changing not only in our market, but across the globe.
As analyzed in our research, these changes are accelerating within retirement savings schemes as the responsibility for funding retirement increasingly falls to the individual, thanks to a shift from traditional defined-benefit pensions to rising defined-contribution constructs. Lifestyle and life-expectancy changes coupled with increased savings autonomy suggest a new retirement paradigm; however, attitudes, policies, and infrastructures haven’t kept pace, creating the potential for significant strain on social systems. But there is an opportunity for governments, employers, and individuals to get ahead of and correct for the societal stress that could come from mismatched population and retirement savings infrastructure dynamics.
At State Street, we have experience with preparing each vital constituent for
the new era of retirement, from participants, to employers, to governments
seeking policy insights. To learn more about how our interdisciplinary team can support your organization in facilitating change, contact us.
The World is Aging
Not only are people living longer, but older people are quickly
becoming the largest cohort across the globe.
Percentage of Population Over 80 in 2045
Retirement Now Lasts Much Longer
People who retire earlier and live longer are facing decades during which expenses must be met.
This new, extended phase in life increases the potential for financial
insecurity, creating a burden on governments, employers, and working
The ‘Working Life’ Must Be Redefined
Dependency ratios — used to measure the pressure on productive populations by dependent populations
(such as retirees) — are under strain. One solution to both the data and the human experience is to shift the expected working-life boundaries to reflect the new demographic era.
For some, extending working life is not feasible. For others, working longer and more flexibly, could promote:
Such advantages can translate into healthier and more secure citizens, contributing to longer-term
Stepping Stones to Change
Find Out More
For deeper insight into the global impacts of demographic change on how people work, consume, and save — and what this means for societal and retirement savings infrastructures — read our thinking on Global Demographics and Retirement Implications.
The practice of enrolling employees in a retirement savings planautomatically, used by some employers to promote participation. Auto-enrolled individuals are given a default savings rate and investment fund, which they can then modify or opt out of entirely.
The automated increase of a participant’s rate of contribution to their defined contribution plan, designed to encourage the participant to save more.
Default Investment Vehicles
Investments used by plan sponsors as the default for any participant whom they have automatically enrolled in a retirement savings plan.
Defined Benefit Plan
An employer-sponsored retirement plan where employee benefits are derived from a specified formula using factors such as, but not limited to, salary history and duration of employment. Investment risk and portfolio management are entirely under the control of the company.
Defined Contribution Plan
An employer-sponsored retirement plan whereby employees make contributions to accumulate wealth during their working years to provide income in retirement. Often times, an employer will match an employee’s contribution,
up to a certain amount.
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