US - The US population will be exposed to increasing retirement risks, as a result of an ongoing transition in the pension landscape, a report by Allianz Global Investors AG (AllianzGI) reveals.
Over the coming two decades around 78 million baby boomers will enter retirement reducing the worker-per-beneficiary ratio from 3.2 today to 2.2 in 2030.
However, AllianzGI said the situation was less severe than in other industrialised countries, such as Japan or Western Europe, as migration will keep the US population growing, however at a decreasing rate.
Brigitte Miksa, head of international pensions at AllianzGI, said: "Even in a country that is only modestly affected by demographic change, an aging population does not come without cost."
The study also pointed out the shift from defined benefit (DB) to defined contribution (DC) raised major challenges for future financial security.
In particular, the study highlighted the low rate of participation to employment-related pension plans. It showed almost 50% of the total workforce in the US did not participate in an employer-sponsored pension plan.
Despite these challenges, the research highlighted the build-up of pension assets was likely to remain dynamic, with growth driven by efforts to build up pension entitlements.
Shifts in the financial portfolio of households are expected as baby boomers begin restructuring assets to generate a largely secure, regular flow of income for retirement.
Brigitte Miksa concluded: "Current economic conditions may impact long-term pension saving by tempting people to draw-down pension assets to alleviate financial hardships such as mortgage financing problems. However, even the most pessimistic scenarios foresee a large accumulation of pension wealth of minimum $25.5trn in the coming decade."
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