FINANCIAL SERVICES | Contributed Content, Singapore

Post-retirement products: the next big challenge for retirement funds

“Ultimately, members will look to their pension fund to provide the strategies and products they need for a secure and enjoyable retirement lifestyle. So it’s up to the industry in every market to think about the best way to deliver that, through whole-of-life strategies that respond to individual needs and situations.”

Simon Eagleton, Business Leader of Mercer’s Investment Consulting business for Asia Pacific.

People often imagine that once they retire, they can stop worrying about saving for retirement; that the hard work’s done and it’s time to spend their hard-earned money. However, in fact, post-retirement investment strategies are now becoming just as important. As people live longer and an ageing population puts pressure on public funds, individuals’ nest eggs need to be larger and last longer.

Unfortunately, the complexity of pre- and post-retirement savings is often overshadowed by the challenge of simply getting fund members to engage at all. Because so many members don’t play an active role in decision-making, retirement funds place most members into default investment options.

But this one-size-fits-all approach doesn’t meet the needs of an ageing population that’s living longer than ever – a population that could live 30 or 40 years in retirement. So it’s time to replace this thinking with a ‘whole of life’ strategy that changes with age.

“We need an investment strategy that’s able to exploit young members’ long term investment horizons, recognises the reduced risk tolerance of members approaching the draw-down phase, and maximises members’ savings once they reach retirement.

“Moreover, we need this to sit within the default structure, because reliance on education alone is insufficient to ensure pension fund members adopt the most appropriate investment strategy,” says Simon Eagleton, Business Leader of Mercer’s Investment Consulting business for Asia Pacific.

Simon Eagleton
Business Leader, Asia Pacific
Mercer’s Investment Consulting business

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The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.

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