Money managers and policymakers must consider and better understand demographics if they are to create suitable strategies and solutions for retirement, said Amlan Roy, managing director, head of global demographics and pension research at Credit Suisse.
Opening Pensions & Investments' second Global Future of Retirement conference in New York, Mr. Roy shared lessons learned over 15 years from speaking with executives at pension funds, central banks, insurance companies, endowments and foundations, and other investors.
“The sum and substance of today is we do not understand demographics,” Mr. Roy said.
Simply counting the numbers to derive conclusions on demographics is not enough, he said. An important point to remember is that “from the time we are born to the time we die, we are consumers. We need to understand consumerism,” he said. “Demographics is about consumers and workers.”
Among his points, Mr. Roy highlighted the growth of the “super-old,” those 80 years and older. “They are the fastest growing age group,” and that group grows four times faster than the total population.
Mr. Roy said this and other points were indicative of the fact that the retirement age of 65 “no longer works for a world where people are living” so much longer.
“Changing retirement ages is not the total solution to the pensions problem,” Mr. Roy said. He highlighted differences in a number of pension funds, including a miners pension fund, for whose participants working into their late 60s might not be possible.
Mr. Roy also challenged money managers to develop “new solutions for clients” to help to address increasing longevity. “The products we need for a 65-year-old will be very different for 85-year-olds.”