US - Companies have been given the power to automatically enrol employees into 401(k) and defined contribution (DC) pension schemes under the terms of a ruling by secretary of labor, Elaine Chao.
The decision, part of the implementation of the Pensions Protection Act (PPA), has seen the creation of qualified default investment alternatives (QDIAs), designed to encourage greater employee saving for retirement in long term investment vehicles.
Chao said in a statement: “This is a key component of the PPA and will help many more workers and their families build a nest egg for a secure and comfortable retirement.”
It is estimated the establishment of mandatory QDIAs woud increase retirement savings in DC schemes by up to US$134bn by 2034.
The regulation covers plan fiduciaries who invest the assets of workers not currently enrolled in specific savings schemes.
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.