Emerging markets policymakers' uphill battle to ensure a comfortable retirement for their fast-aging populations became considerably more daunting last year as the coronavirus ripped through the global economy.
Creative approaches to asset allocation and structural changes to keep retirement systems from morphing into rainy day funds are topics policymakers could find themselves grappling with as they look to move forward again after a year that saw many running just to stay in place, analysts said.
If much about the outlook remains uncertain, it's clear debt-laden governments will be more constrained and capital market returns will be less generous over coming years — a tough backdrop as rapidly aging societies make the need for reforms more urgent, said David Knox, Melbourne-based senior partner with Mercer Australia and lead author of the annual Mercer CFA Institute Global Pension Index.
The average index ranking for the 39 national retirement systems covered in Mercer's 2020 report — a mix of ratings for (a) the adequacy of retirement benefits, (b) the sustainability of that level of benefits and (c) how transparently and efficiently the system is run and governed — slipped only marginally to 59.2 from 59.3 the year before but Mr. Knox warned that the effects of the pandemic would be felt with a lag.
Reforms aimed at extending coverage of work-related retirement plans and encouraging private savings took a back seat last year as the pandemic forced governments to focus on threats to the health of their citizens and their economies.