EUROPE - Regulators worldwide should focus on measures that improve risk management, rather than seeking to discourage risky assets outright, according to pensions experts at a recent Allianz Global Investors roundtable.
Industry figures called on regulators to focus on "essential" issues such as scale, tax incentives, auto-enrolment, easy-to-understand default options and financial literacy for young people.
Elizabeth Corley, chief executive at Allianz Global Investors Europe, said retirement income would become an "endangered species" if the second and third pillars were not effective enough.
She also warned that any new pension designs that failed to meet people's expectations would be seen as investing in a "black box" and could further erode trust in the pension system.
Gordon Clark, Halford Mackinder professor of geography at the university of Oxford, largely agreed, saying that, in light of ongoing financial turmoil and ageing Western societies, it was vital to find the right balance between social security and workplace pensions.
"The first pillar will be discounted in the future, so governments will need to make the second pillar compulsory, as most of the contributors are not conscious of their lifetime needs," he said.
The falls in financial markets have highlighted the need for trustees to understand the risks they have taken and adopt strong management approaches, experts said.
Clark added: "One of the main issues defined benefit schemes have faced is the fact trustees did not have any knowledge of the financial markets.
"The question now is to know how European governments will implement a regulation that will ensure pension schemes are not taking more risk than they should."
However, in some markets such as the UK and Germany, governance capabilities have been reinforced by the injection of more "knowledgeable" trustees, or, in some cases, investors have decided to outsource some of their key investment decisions, according to Divyesh Hindocha, global director for Mercer's investment consulting business.
"On the whole, trustees have maintained the composition of their assets, but they have also made a huge effort to understand their risk exposure and now have a much more structured approach to the risk taken," he said.