Governments, policymakers and regulators need to improve their long-term pension and retirement strategies to meet changing customer demands, according to findings from a new global study by Ernst and Young (EY).
The EY report ‘The $500 trillion prize: A customer-centric vision for the global pension and retirement market' argues that key public and private sector stakeholders will need to collaborate more closely if they are to succeed and improve consumers' financial well-being as the retirement and pension landscape transitions from "defined benefits" to "defined contributions".
"[This] shift means consumers and employers face more decision points about participation and investments, though consumers may then lack the appropriate information to make informed financial decisions," EY global pension and retirement leader, Josef Pilger,said.
According to the report, corporate employers appear to be ahead of other stakeholders in providing "adequate advice", with 75 per cent of corporate employers surveyed saying they had a professional system in place to provide financial advice and information to plan participants, however citing there was still room for improvement.
Only 25 per cent of corporate employers rated their advice capabilities and provision mechanisms as "leading".
"We need to transform and align policy, regulation, culture and delivery infrastructure to empower adequate decisions, experience and approvals [in order to] deliver a better retirement world for all stakeholders," Pilger said.
The report also found that the pension and retirement industry is still lagging behind in realising the potential of digital applications, with 54 per cent of governments, policymakers and regulators acknowledging the need for adopting better digital communication and technology.
"Vision, strategy and role clarity are the foundation of public confidence in pension administration," Pilger said.
"Empowering consumer engagement and informing their decision-making through additional [digital] communications, support and planning must become a key tenet for all pension and retirement systems and solutions".