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The Three Pillars of Retirement Systems

Retirement systems consist of three main pillars: government pensions, workplace pensions, and personal savings. Each pillar's weight varies by country, yet they all confront significant challenges. With increasing life expectancy and lower retirement ages, the ratio of workers to retirees has declined, while historic low interest rates and volatile capital markets strain pension plans. Solutions focus on plan design (defined contribution or hybrid models), improving coverage through automatic enrollment, and balancing delivery between government and private sector involvement.

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The Three Pillars of Retirement Systems

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  1. The Three Pillars of Retirement Systems Government Pensions Workplace Pensions Personal Savings The weight of each pillar varies by country… But all face similar significant challenges People are living longer Life expectancy – Canada (yrs) Retirement age lower than 30 years ago Age Ratio of workers to retirees has fallen Ratio of workers to retirees Interest rates are at historic lows Bank of Canada Rate (%) Capital markets have been very volatile S&P / TXS Index (k) Longer period of time that retirement income is needed Overall systemstrained Liabilities higher for pension plans Challenging market to earn sufficient returns RETIREMENT...

  2. Solutions Revolve Around Three Main Axis 1. Plan Design DefinedContribution Hybrid plans / Shared risk DefinedBenefit 2. Coverage Automaticenrolmentwith opting out Mandatory Volontary 3. Delivery A mix of both Government PrivateSector 3Countries • 3Solutions RETIREMENT...

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