Stormy weather caused disruption for delegates at last month’s Longevity 14 conference in Amsterdam – and discussions lingered on metaphorical storm clouds ahead for retirement systems around the globe.
The annual event brings together pensions and insurance practitioners, actuaries and academics to pore over the latest life expectancy data and longevity modelling techniques. However, for David Blake, professor of pension economics at Cass Business School and organiser of the Longevity conference since 2004, the message was far more fundamental.
“We have a critical problem,” Blake told the handful of journalists gathered in the Dutch capital. “If a significant proportion of each cohort of retirees doesn’t save enough, they are effectively expecting the next generation to bail them out.”
Amy Kessler, head of longevity risk transfer at US insurance giant Prudential and a long-term supporter of the Longevity conferences, added: “This is made so much worse by changing demographics. If people arrive at retirement with inadequate savings in a society with three working people for every retiree – and in Europe by 2050 it will be just two – those people are not going to be able to provide for that retiree.”
Solutions are available, but will be controversial, according to Blake. Compulsory retirement savings are necessary but politically difficult, as is raising the default retirement age (as the Dutch are finding out). A four or five-year political cycle is not sufficient to address this multi-generational problem, he warned and, as such, he predicted more than one generation would face retirement poverty before policymakers acted.
Next year’s conference will be in the US at the same time as the UN General Assembly. World leaders would do well to drop in to the Longevity 15 conference to prepare for the coming storm.
Nick Reeve, News Editor