Lifecycle investment strategies are helping to improve retirement outcomes in Chile, Solange Berstein, former head of the country's Pension Supervisory Authority, told attendees at the Pensions & Investments' Investment Innovation and the Global Future of Retirement conference in New York on Tuesday.
Ms. Berstein said that retirement system officials are considering some limits on freedom of choice among participants, and “default options are critically important.”
In Sweden, reform “is driven by demographics,” said Tomas Franzen, chief investment strategist for AP2, Gothenburg. The “only way” to handle risk efficiently in terms of how it affects future pensions, Mr. Franzen said, is through an automatic balancing mechanism. “We are trying to find the best mix of assets and strategies, with the aim of minimizing pension loss,” he said, which includes reducing exposure to developed markets in both equity and debt, and moving more into alternative investments. Mr. Franzen also expects some restrictions on uncorrelated risks in the portfolio to be lifted by the government. “We think as long-term investors; we should be able to carry this risk,” Mr. Franzen said.
Innovation solutions are somewhat limited in the Australian system because contributions are fixed, said David Schneider, head of research and quant methods for the UniSuper Management Pty. “We prefer not to reduce benefits. That means the only risk control lever we have in place is the asset allocation strategy,” Mr. Schneider said. New initiatives include creating buckets for three levels of risks and assigning each investment holding to one of those buckets. “It's almost like we only have three asset classes now,” he said.