The Netherlands and the Nordic countries, despite having the world’s most highly rated pensions systems, will fail to solve the problem of population ageing if they rely solely on raising the retirement age, according to Amlan Roy, head of global demographics and pensions research at Credit Suisse Securities.
Speaking at the IPE Awards Seminar in Noordwijk, Roy argued that the countries must do more to take advantage of the available skills, health and social benefits of the participants of individual pension funds.
In his keynote speech, he stressed that demographics represented the single-most important factor for the future of pensions provision.
“Because it gets insufficient attention and is poorly understood, we must ask hard questions of actuaries, asset managers and professors of macroeconomics,” he said.
“Demographics is not only about long-term effects or age-related issues, or is predictable – it is about people as consumers and workers,” he said. “It is affecting income statements and balance sheets of households, corporations and countries.”
According to Roy, 65-74 year olds are the richest population group currently.
“The challenge,” he said, “is to treat future generations fairly.”
He noted that demographic changes in both developed and developing countries created many opportunities for financial services industries in terms of product innovation, risk diversification and asset allocation.
Roy said demographic changes most affected emerging markets, infrastructure, financial services and the pharmaceutical, biotech, leisure and luxury industries.
He also pointed out that emerging markets, such as the so-called BRIC countries, were demographically very diverse.
“Russia and China are getting older before they get richer,” he said, adding that, in 2050, nine out of 10 of the most populous countries will be emerging ones.
The head of pensions research at Credit Suisse Securities reminded his audience that, in 2030, the number of women in Europe over the age of 80 would outnumber males by 2 to 1.
Roy further warned that rising youth unemployment was a threat to growth and stability.