Main presentation title - OECD. · PDF fileRetirement Readiness OECD/IOPS GLOBAL FORUM ON PRIVATE PENSIONS - Sydney Nov 2-3 Brigitte Miksa, Head of International Pensions, Allianz

Retirement Readiness

OECD/IOPS GLOBAL FORUM ON PRIVATE PENSIONS - Sydney Nov 2-3

Brigitte Miksa, Head of International Pensions, Allianz Global Investors AG

November 2010

International Pensions

© Copyright Allianz Global Investors AG 2010 - Sept 2010 - 2

New funded pension schemes shape the global retirement markets

Paradigm shift is occurring on the system level…

Source: Allianz Global Investors

New pension

reserve funds

- China

- South Korea

- France

- Spain

- Sweden

- …

Singapore (1955)

1950s 1980s 1990s 2000+

Chile (1981) Australia (1992)

Peru (1993)

Thailand (1997)

Hungary (1998)

Poland (1999)

Hong Kong (2000)

Japan (2001)

Bulgaria (2002)

Croatia (2002)

China (2004)

India (2004)

Taiwan (2005)

Slovakia (2005)

South Korea (2005)

Romania (2007)

Thailand (2010)

Austria (2003 & 2005)

Belgium (2004)

France (2003)

Germany (2001)

Ireland (2003)

UK (2001 & 2012)



Public finances

Pension payments/GDP

Public indebtedness/GDP

Taxes and social security

contributions/GDP

* Ratio of 65 years of age to 15 to 64 years of age

** In Asian countries, includes coverage within the workforce

Demographics

Old-age dependency ratio*

Change in elderly dependency

ratio* until 2050

Pension Sustainability Index

Design of pension

system

replacement rate 1st pillar**

Legal retirement age

Strength of funded pillar

(as % of GDP)

Reforms passed

change in replacement rate

change of pension payments/GDP

until 2050

Sub-indicators Status Dynamics



Sustainability of public pensions

Source: Allianz Global Investors,

International pensions 2009.

Allianz Pension Reform Pressure Gauge - Scale from 1 - 10: 1 minor need for reforms, 10 high need for reforms

0 2 4 6 8

INCNGRTHSI

ESROJPSKBEHUPTATIE

BGIT

LuxCZSGFRKRLTDEUSHRFI

NOPL

TWEEUKCH NLLVDKNZHKSEAU



Diversification across pension pillars is a key requirement for the sustainability

of pension systems

Pension pillars Function Risks Design options

Redistribution

Insurance

• Political

• Inflation

• Demography

• Pay-as-you-go

• Tax-financed

Accumulation of

savings

Capital accumulation&

financial market

development

• Inflation

• Employer

insolvency

• Longevity

• Investment

• Mandatory/voluntary

• Defined Benefit/

Defined Contribution

Additional savings for

financial security

• Inflation

• Investment

• Longevity

• Tax advantages

• Guaranteed/not

guaranteed products

Public

pillar

Occupational pillar

Personal pillar

Stable and reliable pension systems need several pillars to balance out risks of the respective

and arrive at an acceptable level of overall risk

To

tal

reti

rem

en

t in

co

me a

deq

uate

?



Importance of retirement income sources in % of retirement income

85

81

80

79

73

72

70

69

56

49

48

48

44

36

15

8

7

2

1

15

5

22

32

39

7

42

36

30

26

7

12

19

21

12

24

25

10

12

12

44

10

20

34

59

4

0 10 20 30 40 50 60 70 80 90 100

France

Belgium

Austria

Poland

Germany

Italy

Spain

Sweden

Denmark

United Kingdom

Japan

Netherlands

Australia

United States

Korea

Public transfers Capital Work

Retirement income mix differs substantially across countries

Sources: OECD, Pensions at a Glance 2009.

What is an optimal composition of income sources?



•National Retirement Risk Index (Boston College);

•EBRI

•FED: Wealth adequacy – comprehensive measure of income

• McKinsey

PPI (Pensions Policy Institute): Retirement income and assets project

•DIW-SOEP: Analysis of wealth distribution extended by vested old age provision

•ZEW: Analysis of poverty risk with inclusion of financial assets

•Fidelity: REAL – Index (Renten- und Alterssicherungs-Index) – derived from survey

results to evaluate customers’ future income gap

HSBC (survey); BBVA

Understanding adequacy of pensions and retirement income


US

UK

Germany

Other

Moving towards comprehensive approach of retirement income measures



Expenditure

needs

Basic consumption

Various consumption

groups

Health care

Retirement Readiness Indicator (OECD / AGI)

Income

Sources

Public pensions

Occupational pensions

Private pensions schemes

Financial wealth

(Housing)

Components Sub-components Sub-groups

Total resources

Total needs

>

< ? Indicator

Average population

Income groups (5)

Cohorts (3)

Income groups

per cohort (15)



Main challenges

Retirement Readiness Indicator (OECD/AGI)


Access to detailed survey data in different countries

Modeling the first and second pillar accruals according to the OECD replacement rate model for

new entrants

Analysis of voluntary pension schemes and modeling the accumulation phase

Analysis of general savings behavior and asset formation; modeling the accumulation phase

Modeling the decumulation phase for assets and funded schemes

Analysis of consumption patterns to derive expenditure benchmarks for subgroups



About us



AllianzGI International Pensions:

Multiplying investment and retirement knowledge

Understanding pension systems and market trends

- Analysis of global pension & retirement markets and

trends

- Analysis of pension regulation and investment policies

- In cooperation with the OECD and other partners

Identification of pension-related client needs and market

demands for product solutions

- Surveys on client demand in specific markets

- Initiation of products and solutions for old age provision

in accumulation and pay-out phase

- In cooperation with risklab, AllianzGI entities globally

and regional Allianz life insurance companies

Communication of expertise and informed dialogue

with decision makers

- Client seminars and conferences

- Inhouse training and education

- Publications and magazine PROJECT M

- Support of lobbying

Activities

Comprehensive pension market studies on Western Europe

(2003, 2005, 2009), Central and Eastern Europe (2004,

2007), Asia (2005, 2007) and U.S.A. (2009)

Pension Paper Series on specific issues

Conferences and client seminars in Istanbul, Bejing,

Shanghai, Taipeh, Seoul, Paris, London, Amsterdam,

Vienna, Frankfurt, Munich

http://publications.allianzgi.com



Which markets and regions do we target?

Who are our research partners?

Markets covered

45 markets world-wide

updated annually

Regions in focus

EU (Western Europe, CEE)

Asia-Pacific

United States of America

Research partners and network

Professional market research firms, e.g. Research International

(2007), ZEW/ Center for European Economic Research (2009)

for primary market and client research

OECD (Organisation of Economic Cooperation and Development) –

sponsoring of Global Pension Statistics Project of the OECD, research

cooperation with the Private Pensions Unit* (and International

Organisation of Pension Supervisors IOPS)

Partners for research, communication and marketing within AllianzGI

and Allianz SE, amongst others Allianz Dresdner Economic Research,

Allianz Social Opportunities, economic and financial research entities

within AllianzGI, risklab germany…



Thank you for your attention!

The presentation is intended for general information purposes only.

The presentation is based on publicly available sources and own sources verified at the time of release. However Allianz Global Investors AG does not warrant the accuracy, reliability or completeness of any information contained in this presentation. Neither Allianz Global Investors AG nor its employees and deputies will take legal responsibility for any errors or omissions. Further Allianz Global Investors AG assumes no obligation to update or revise publicly any forward-looking information contained herein.

None of the information should be interpreted as a solicitation, offer or recommendation of any kind. Certain of the statements contained herein may be statements of future expectations and involve known and unknown risks and uncertainties that may cause actual results, performance or events to differ materially from those expressed or implied in such statements.

Please contact for further information

Brigitte Miksa, Head of International Pensions, Allianz Global Investors AG – Seidlstr. 24-24a, D-80335 Munich

email: [email protected] – phone: +49 89 1220 7478 or [email protected]

mailto:[email protected]

Documents

Main presentation title - OECD. · PDF fileRetirement Readiness OECD/IOPS GLOBAL FORUM ON PRIVATE PENSIONS - Sydney Nov 2-3 Brigitte Miksa, Head of International Pensions, Allianz