Report Assesses the Relative Strengths of Global DC Systems and Details Best Practices Across Pension Plan Governance and Design
BOSTON–(BUSINESS WIRE)– State Street Corporation (NYSE: STT), one of the world’s leading providers of financial services to institutional investors, today released its latest Vision paper examining the current challenges facing defined contribution (DC) pension systems following the significant volatility in the global financial markets over the last two years. Entitled “Pensions: Strengthening the DC Model for the Future,” the report assesses the relative strengths of global DC systems and details best practices across governance and design of pension plans.
This new Vision paper follows State Street’s earlier report on pensions published in 2008, and highlights the significantly altered investment environment facing pension systems as well as recent developments in the DC marketplace.
“As the shift to defined contribution retirement plans continues to accelerate as the primary vehicle for providing for retirement, a growing need for education focused on saving for retirement, including the importance of starting early and making regular contributions, has emerged, ” said James Phalen, executive vice president of State Street. “Because DC represents the future of retirement plan models in many markets, the financial services industry should continue to work creatively and collaboratively with other stakeholders — including policymakers — to solve one of the most compelling social challenges of our time: ensuring sufficient funding to support a decent quality of life in retirement for an aging population.”
With the growth of DC assets now outpacing defined benefit (DB) assets globally,¹ the debate has been renewed about the relative merits of all aspects of DC plans, from governance practices to appropriate investment options.
The Vision paper states, “Reduced participant account balances have illustrated the inherent disconnect in most DC models: Risk is transferred onto the individual without always transferring adequate knowledge or oversight, despite more than a decade of efforts on the part of practitioners and plan sponsors to educate and inform individuals about retirement planning.”
State Street provides investment management and investment servicing for more than $4.4 trillion in pension assets (as of December 31, 2009). State Street also partners with policymakers and industry groups around the world to facilitate the development of pension systems.
State Street’s Vision Series of in-depth reports is intended to advance understanding of key themes and trends in the financial services industry. A copy of this pensions paper can be downloaded at www.statestreet.com/vision or to order a hard copy please email firstname.lastname@example.org. Previous papers in State Street’s Vision series address a range of topics, including UCITS IV, sovereign wealth funds, hedge funds and private equity, and derivatives servicing.
About State Street
State Street Corporation (NYSE: STT) is one of the world’s leading providers of financial services to institutional investors, including investment servicing, investment management and investment research and trading. With $18.8 trillion in assets under custody and administration, and $1.9 trillion in assets under management at December 31, 2009, State Street operates in 25 countries and more than 100 geographic markets worldwide. For more information, visit State Street’s website at www.statestreet.com.
¹Source: 2010 Global Pensions Assets Study, Towers Watson, January 2010
State Street Corporation
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Source: State Street Corporation