At a breakfast meeting at Toronto’s National Club, Ronald O’Hanley, president and chief executive officer of Mellon Asset Management said there is definitely a new retirement landscape and it should incorporate demographics into returns.
There is a theory, he stated, that once baby boomers retire and divest their investments, equities will decline just based on the sheer numbers of people involved. But, it’s really the 40 to 55 year olds to be considered as they are the greatest asset earners and have the most influence on the markets.
O’Hanley also said individuals need a higher level of financial literacy to cope with the changing investment environment and annuitization, in some for, should be part of future pension plans. “Some form of income guarantee is required,” he said.
Defined contribution plans, he added, are not as good as defined benefit(DB)plans as managing longevity risk and therefore need to be saved in some form. He suggested creating a benefit based on today’s pay rather than future pay as well as making DB plans more portable.