Modern Pensions: presentation to Conference Board Pensions Summit

Modern pensions Conference Board Pensions Summit presentation

Alex Mazer, Founding PartnerApril 13, 2016

Can pensions evolve?

2

Demand for retirement security is rising

3

Under-saving Health

Fiscal restraint Inequality

17% 50%TO

Post-pension financial products have disappointed

4

High fees

Marketing-driven

Members not first

Myth of choice

Financialization

5

Finance as a share of US GDP (%)

Source: Demos

The future of retirement: divergent paths

6

Employer pensionsModern pensions

Financial products

§  Member-focused§  Collective§  Low-cost§  Simple§  Accumulation + decumulation

§  Profit-driven§  Individualized§  High-cost§  Complex§  Accumulation-only

How pensions are usually defined

7

Regulatory category Plan design Institution

DB

DCvs

ERISAPBAPBSA

PRPP

Employer

Union

Public vs private sector

$ 1

Towards a functional definition

8

2

Singular focus

Members first

Contributions

Retirement security

Members

Others

Optimal sponsoring organizations

9

ScaleLongevity

Mandate

Principles underlying modern pensions

10

Single purpose: retirement security Simplicity

Lifetime approach Good governance

Minimize costs Fiduciary duty made real

Passive is usually betterTax and benefits

efficiency

Examples of modern pensions

11

Well-established

Starting up

The future? Unions

Governments

Associations

Pension funds

The good news: it’s not a moonshot

12

We’ve already got the parts

13

Sponsors Strong union, government, and association-sponsored plans.

Governance Much-admired governance models that work.

Investments New passive offerings. Active approaches that have added after-cost value.

Regulatory New plan types. More reformist governments.

From good to great

14

Decumulation Non-lump-sum products that are affordable and understandable

Alternatives Democratize access

Technology Simpler, cheaper administration

Regulation Nimble, integrated, pro-innovation

“Canadian model” Expand to private and third sectors

Questions?

15

Alex Mazer

[email protected]@CWpensionswww.common-wealth.ca