BOSTON--(BUSINESS WIRE)--Pension funds’ mission to deliver optimal outcomes over the long term continues to be tested by historically low interest rates, booming populations and increased life expectancies, and unprecedented market volatility. New research released today by State Street Corporation (NYSE:STT), Pensions with Purpose: Meeting the Retirement Challenge, finds funds are taking action in governance, efficiency, long-term investing, risk management and talent development to ensure successful outcomes for retirement plan participants over the next three years.
“As a result of the difficult economic environment and shifting demographics, the most innovative pension funds are proceeding with confidence in tackling the retirement challenge,” said Martin J. Sullivan, head of Asset Owner sector solutions for North America, State Street Corporation. “While there’s no single strategy that will solve the challenges for the entire industry, leading pension funds are employing stronger governance frameworks, more advanced risk management capabilities and a more diverse and specialized talent pool to meet long-term objectives.”
Based on responses from 400 pension professionals in 20 countries over a period of two months, the survey found that pension funds will look to “own” five strategic retirement aspects:
Own the Outcome: Board training and education will be the focus of 2016
Own the Future: Funds are transforming to meet future obligations, with a focus on ESG and alternatives
Own the Efficiency: Under pressure to cost cut, pension funds turn to asset pooling
Own the Risk: Pension plans face stark choices around risk
Own the Talent: The insourcing continues, but external advisors are still vital to success
“As life expectancies around the world continue to rise dramatically, there is increased strain on retirement infrastructure,” said Rob Baillie, head of State Street Canada. “The ultimate mission of the global pension industry is to deliver the best outcomes for savers over the long term. Although that mission is getting harder, our research shows that pension funds recognize the need to pursue fresh strategies and are focused on renewing their purpose of owning the future of retirement.”
The pension industry faces immense challenges in its mission to deliver the best retirement outcomes for citizens, amid vast demographic change and rising dependency ratios. State Street has developed an interactive infographic that demonstrates the distance between retirement and savings. Click here to view the tool and download the full report.
About the Research
On behalf of State Street, Longitude Research, a global research firm, conducted the survey of institutional asset owners in October and November of 2015. The survey garnered 400 responses from pension fund professionals, spanning both defined contribution and defined benefit assets across 20 countries. Over half (68 percent) of respondents came from private sector pension systems, 25 percent from public sector pension funds and 7 percent from superannuation funds.
About State Street Corporation
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 $28 trillion in assets under custody and administration and $2 trillion* in assets under management as of December 31, 2015, State Street operates in more than 100 geographic markets worldwide, including the US, Canada, Europe, the Middle East and Asia. For more information, visit State Street’s website at www.statestreet.com.
*Assets under management were $2 trillion as of December 31, 2015. Assets under management include approximately $22 billion as of December 31, 2015, for which State Street Global Markets, LLC, an affiliate of SSGA, serves as the distribution agent.
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